Propane Poised for Comeback as Hunt for Gasoline Replacements Intensifies

Propane Poised for Comeback as Hunt for Gasoline Replacements Intensifies

By John O'Dell July 23, 2010

(CORRECTON, 7/27/10: This article originally incorrectly referred to propane as liquefied natural gas (LNG). Propane is actually liquefied petroleum gas (LPG), which is stored at higher pressure and has different properties than LNG.)By Danny King, Contributor

Natural gas as an automotive fuel has been in the news lately as the U.S. searches for a way to reduce use of imported oil, but when talk turns to natural gas it is usually about the compressed version, or CNG.

But propane, otherwise known as liquefied natural gas, or LNG LPG, is making a comeback and as a vehicle fuel could not only help cut oil use but would help improve air quality, researchers say.

A variety of government agencies and commercial fueling collectives are likely over the next dozen years or so to reverse the decade-long decline in the use of LNG LPG for fleet vehicles as more manufacturers develop engines that can run on propane and governments extend tax incentives, according to a new report from Argonne National Laboratory.

Additionally, stricter heavy-duty vehicle emission standards and the higher costs of complying with such regulations related to diesel engines may encourage more vehicle makers to pursue natural-gas alternatives for trucks and other fleets, according to the report.

Propane use by taxis, school buses and other vehicles may increase as much as 15 percent per year through 2020, according to the report, which cited consultant ICF International. Annual propane production will have increased 35 percent to about 270 million tons between 2000 and 2012.

Such increases would help cut foreign-oil dependency because about 60 percent of U.S. propane comes from natural gas - and that percentage is expected to increase. The U.S. and Canada account for about a quarter of the global propane supply, according to the report.

"Enough propane to fuel targeted fleet vehicles appears to be available, with expansion opportunities apparent in the school bus, taxicab, police, and paratransit markets," the report said.

The boost in LNG LPG use would represent a reversal of sorts. With the propane costing between $1 and $1.50 per gallon more than regular gas, many U.S. governments have replaced their propane-powered fleet with ethanol-powered vehicles and hybrids. Original equipment manufacturers (OEMs) stopped making propane-powered cars and trucks in 2002, while regulators have made it harder for companies that make conversion kits to meet emissions standards.

As a result, only about one in 1,500 U.S. motor vehicles are propane-powered, and with just 160,000 LNG LPG vehicles on the road, the U.S. lags global leaders such as South Korea and Poland, which each have more than 2 million vehicles that run on propane.

But with the search on for gasoline alternatives, government subsidies and increased use could help lower propane prices - and the lower cost of converting vehicles to propane versus using expensive diesel engines or hybrid powerplants also could help make the fuel more cost-efficient, the report suggests.

Pointing to an upswing in U.S. propane use is activity by companies like Roush Industries, which makes LNG LPG conversion kits that can be used in Ford's F-250 and F-350 trucks, and marketing cooperatives like Alliance AutoGas that are developing conversion kits for police cars and taxis and are rolling out more propane dispensers. Ford Motor Co. last month said it would start selling F-450 and F-550 pickup trucks later this year that will be able to run on either propane or CNG.

Meanwhile, producers and distributors such as California-based Clean Energy Fuels Corp. are inking agreements to supply LNG to municipal trash trucks and other fleet vehicles.

Argonne is projecting an optimistic scenario with as many as a third of all U.S. heavy-duty fleet vehicles running on natural gas by 2050.

Whether the U.S. can narrow the propane-use gap with countries like South Korea remains in question, though. Automakers Hyundai and Kia have released propane-hybrid vehicles in their home market, but have made no plans to sell them in the U.S.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.