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Natural gas – a cheaper alternative to diesel?

April saw the highest fuel price hikes yet, as South African motorists were compelled to absorb sharp increases in the price of both petrol and diesel. This poses a huge threat to a transportation sector that is already under pressure. LIANA SHAW explores alternative fuel options available locally.

Gareth Jones, head of technical sales, Tetra4, says: “With respect to diesel prices in South Africa, the only certainty is uncertainty. The two main drivers influencing the diesel pump price are the international crude oil price and the rand/dollar exchange rate, both of which can fluctuate greatly.”

To illustrate these factors, the pump price of 50 ppm diesel in March 2012 was R10,40/litre based on a crude oil price of US$ 120/barrel (at R7,64 to the dollar). In March 2019, the same diesel cost R14,05/litre based on crude oil at US$ 64/barrel (R13,80 to the dollar).

That is an increase of 35 percent, despite an almost 50-percent drop in the price of crude oil during the same period. If the crude oil price reaches US$ 120/barrel again, the expected diesel price at current exchange rates would be over R20/litre.

“To compound matters, additional taxes, such as carbon tax, are being levied on both petrol and diesel, thereby driving up fuel prices again,” Jones adds. The fuel levy has risen by nearly 22 percent over the past three years!

In addition to the environmental benefits, it’s little wonder that producers and suppliers of alternative fuels see South Africa as a prime market.

According to Jones, Tetra4’s natural gas, per diesel litre equivalent (DLE), will be around 25-percent less expensive than diesel to operate. Taking March’s diesel price of R14,05/litre, Tetra4’s customers will pay the equivalent of only R10,54/DLE for a premium-grade fuel.

“For a trucking fleet, this could mean savings of millions of rand per annum, with the added benefit of reduced environmental emissions,” suggests Jones.

Environmental benefits

Equally important, vehicles powered by natural gas provide significant air-quality benefits compared with other fuels, such as diesel. Using natural-gas vehicles reduces both smog-related emissions as well as toxic emissions that can affect human health.

Moreover, using natural-gas vehicles reduces greenhouse gas pollution by between 10 and 25 percent. Jones explains that, as Tetra4’s natural gas contains no sulphur, SOx is eliminated and NOx and particulate emissions are significantly reduced.

As part of its continued battle against air pollution, the Chinese government is encouraging the use of vehicles powered by clean energy and tightening control over emissions from new motor vehicles. This trend is occurring worldwide as major cities are starting to restrict, and will eventually ban, the entry of diesel trucks into city centres.

Closer to home, the Carbon Tax Bill is expected to come into effect on June 1, and will level the playing field between carbon-intensive (fossil fuel-based firms) and low-carbon-emitting sectors. As it currently stands, there is no carbon tax on natural gas. Even if it is applied in the future, the reduced carbon emitted by natural gas will attract the lowest carbon tax.

“On a total carbon-footprint basis, operating a vehicle with natural gas in South Africa will be environmentally cleaner than an electric vehicle with respect to gas emissions,” claims Jones.

“This is because countries such as China and South Africa, that rely on coal to generate electricity, will continue to have a poor carbon footprint. In contrast, Nordic countries, for example, where electricity is predominantly generated from hydropower, will have an excellent carbon footprint for electric vehicles.”

Tetra4, a subsidiary of Renergen Limited, is developing a unique gas field in Virginia, in the Free State, which is being dubbed as the cleaner premium fuel for engines. Unlike gas generated from traditional hydrocarbon oil and/or gas fields, the gas produced from Tetra4’s gas field originates from microbes deep underground. These microbes generate only one hydrocarbon – methane – making it one of the cleanest and most consistent natural-gas sources in the world.

Typically, pipeline natural gas contains other hydrocarbons – such as ethane, ethene, propane and butane – which could interfere with the smooth operation of an engine. In contrast, pure methane has the highest knock-resistance properties of all commercial gases and thus substituting diesel with methane will have minimal effect on engine performance and will result in less wear and tear on the engine; thus reducing engine maintenance compared to diesel.

Building natural gas infrastructure

In eMalahleni, Mpumalanga, sustainable energy solutions, technology and management company, NOVO Energy, recently launched its large-scale natural-gas compression (NGC) facility.

The R130-million facility is claimed to represent the most advanced compressed natural-gas (CNG) infrastructure in the world and will provide cleaner, more reliable and cost-effective energy compared to coal and other petroleum products.

The eMalahleni plant, which took less than six months to build, will operate continually throughout the year. It is a fully automated site with substantial compression capacity and access to very large gas supplies. It is described as a gas-aggregation hub, boasting a configuration of compressors and loading facilities that can handle a lot of logistics through the site. It also has the ability to refuel vehicles on site.

NOVO Energy CEO, Andri Hugo, elaborates: “The site is a national key point so we can eliminate supply interruptions when there’s no electricity. A great deal of redundancy has been built into the site on all components from a compression, loading and logistics fleet point of view, thereby ensuring service supply to our customers.

“The reason we built this facility, aside from meeting the growing demand for CNG, is to supply customers who are not on an existing gas pipeline. As a gas aggregation hub, we can receive gas, process the molecules and manage the logistics of getting the gas to our customers. From mines, to bakeries, factories, hospitals or a fleet – we deliver the CNG to customers’ sites via road with our gas packs installed on trailers. The gas is then fed into either a factory or refuelling station,” adds Hugo.

Through its customised offering, NOVO Energy is aiming to deliver CNG to industrial, mining, pharmaceutical, agricultural, food and transport customers with requirements for heat, steam, power generation and cleaner fuel for transportation.

FOCUS on Transport and Logistics is one of the oldest and most respected transport and logistics publications in southern Africa.

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