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PREPARE FOR THE FUTURE OF FUEL

Featuring: Brian Chase, Chevron Lubricants Bill Taylor, kVA

SHOW 2013

NATSO

The Future of Fuels for Heavy Trucks

Findings from the National Petroleum Councils 2012 Study Advancing Technology for Americas Transportation Future

Brian Chase
Senior Consultant, Chevron

Bill Taylor
Managing Partner, kVA

THE

FEB 3-7 SAVANNAH, GA.

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Presentation Outline

The Future of Fuels for Heavy-Duty Trucks

Background
The National Petroleum Council The NPC Future of Transportation Fuels Study

Study Approach Findings

Overview Background

The National Petroleum Council (NPC)

Origins Established in 1946 at the request of President Truman Advise the U.S. Secretary of Energy and Executive Branch by conducting studies at their request Federally chartered, self-funded Advisory Committee; not an advocacy group; does not lobby

Purpose

Organization

2012 Chevron

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Overview

NPC Request From Energy Secretary Chu

Examine
opportunities to accelerate future prospects through 2050 for transportation fuels

Address
fuel demand, supply, infrastructure and technology

Consider
Economic competitiveness Energy security

Environment
Actions to stimulate the technological advances and market conditions needed to reduce greenhouse gas emissions in the U.S. transportation sector by 50 percent

2012 Chevron

Overview Overview

Study Organization NPC Fuels Study Structure and Leadership

National Petroleum Council

Committee on Future Transportation Fuels

Executive Committee Future Transportation Fuels
Chair
Clarence Cazalot, Jr. (Marathon)

Government Co-Chair
Daniel Poneman (DOE)

Vice Chair Supply

John Watson (Chevron)

Vice Chair Technology

John Deutch (MIT)

Vice Chair Demand

James Owens (Caterpillar)

Secretary
Marshall Nichols (NPC)

Fuels Study Coordinating Subcommittee

Chair: Linda Capuano (Marathon)

Demand Task Group

Task Group Chair Deanne Short (Caterpillar)

Supply and Infrastructure Task Group

Task Group Chair Shariq Yosufzai (Chevron)

Technology Task Group

Task Group Chair Stephen Brand (ConocoPhillips)

2012 Chevron

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Overview Study Participants

Varied Viewpoints From More Than 300 Participants

Overview - Expertise

Renowned Experts from Diverse Technical Fields

Area Energy Security and Policy (Chair) Agriculture Biofuels Applied Physics and Policy Batteries/Electrochemistry Biotechnology Cryogenic Storage Economics Economics Energy Efficiency Engines Engines Hydrogen/Fuel Cells Materials Science/Nanotechnology Solar Fuels Expert
John Deutch Robert Fraley Venkatesh Narayanamutri Yet-Ming Chiang Jay Keasling Tom Drube Robert Topel Severin Borenstein Amory Lovins John Heywood Robert Dibble Henry White George Whitesides Daniel Nocera

Organization
Massachusetts Institute of Technology Monsanto Harvard University MIT/A123 Systems U.C. Berkeley/JBEI Chart Industries University of Chicago U.C. Berkeley Rocky Mountain Institute Massachusetts Institute of Technology U.C. Berkeley University of Utah Harvard University Massachusetts Institute of Technology

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Presentation Outline

The Future of Fuels for Heavy-Duty Trucks

Background

Study Approach
Findings

Study Approach Step 1

Step 1: Analyze Individual Fuel and Vehicle Systems

The study was asked to consider what needs to be done to accelerate the commercialization of alternative fuel-vehicle systems.
1: Fuel and Vehicle Systems

1
Analyze individual fuel and vehicle systems

2
Develop integrated portfolios with aggressive assumptions

3
Create findings, recommendations and insights

Hydrocarbon Liquids

Biofuels

Electric

Natural Gas

Hydrogen

2012 Chevron

Fuel pathways examined independently to identify technology barriers, economic tradeoffs, fuel availability

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Study Approach Step 1

Truck energy systems analyzed, including future technologies

Where Does Fuel Energy Go?
Inertia/braking
Urban: 15 - 20% Interstate: 0 - 2%

Aerodynamic losses
Urban: 4 - 10% Interstate: 15 - 22%

Engine losses
Urban: 58 - 60% Interstate: 58 - 59%

Auxiliary loads
Urban: 7 - 8% Interstate: 1 - 4%

Drivetrain
Urban: 5 - 6% Interstate: 2 - 4%

Rolling resistance
Urban: 8 - 12% Interstate: 13 - 16%

Study Approach Step 1

Diesel Trucks and Engines are Always Evolving

Over 40 technologies evaluated for heavy-truck application aerodynamics

hybridization

advanced transmissions (DCT, AMT)

APUs & Idle Reduction

driveline optimization

waste-heat recovery

diesel engine technology

advanced fuel systems

single wide-base tires

telematics, route optimization

low-friction bearings

novel turbo- and supercharging

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2: Insights
Demand/Supply Integration
Study Approach Step 2

Develop Integratedportfolios withof Technology Developed integrated Portfolios aggressive assumptions

2012 Chevron

Scenario approach looks at many feasible outcomes

Study Approach Step 2

Cost of Fuel Economy Concept for Technology Adoption

$80,000

Incremental cost of a class 8 tractor

$70,000 $60,000

NESCCAF 2009 EPA-NHTSA NRC-NAS

$50,000 $40,000 $30,000 $20,000 $10,000 $0

RMI

Each data point represents a single technology

1.00

1.20

1.40

1.60

1.80

2.00

Heavy Truck Fuel Economy, miles/gal (diesel)

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Study Approach Step 2

Use economic models to determine preferred options

NPC Vehicle Attribute Model

truck price, truck fuel economy

VISION Model TRUCK 5.0 Model

fuel-type market share

national fleet fuel use, fuel mix, GHG

Study Approach Step 2

Potential future scenarios, including

future mix of engines and fuels

truck fleet fuel economy

overall truck fuel use

overall greenhouse gas emissions

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Presentation Outline

The Future of Fuels for Heavy-Duty Trucks

Background Study Approach

Findings

Heavy Duty Fuel Options

Fuel Choices, Each with Advantages and Disadvantages

bio-diesel

CNG LNG
electricity

diesel
gasoline
ethanol

hydrogen

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Heavy Duty Fuel Options

Traditional Hydrocarbon Fuels : Diesel and Gasoline

Advantages
Widespread availability High energy density Low engine & vehicle cost

Disadvantages
Increasing fuel cost Greenhouse gas emissions

Hydrocarbon Fuel Price Scenarios

Developed from DOE-EIA Annual Energy Outlook

$7.00 $6.00
Dispensed Fuel Price, $/DEG (diesel-equivalent-gallon)
Diesel, high oil price s

cenario

$5.00 $4.00 $3.00 $2.00 $1.00 $Dies ediu el, m

pric m oil

e sce

nario

Diesel, low oil price scenario

2010 2015 2020 2025 2030 2035 2040 2045 2050

10

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Findings - Overall truck energy use

Heavy-duty truck fuel economy climbs steadily

12
Class 7&8 Fleet-Averaged Fuel Economy (MPDEG)

11 10 9 8 7 6 5 4

2010

2035

2050

Findings - Large gains in truck fuel economy

Driven by many incremental technology improvements

Single Wide-Base Tires

Low-Friction Bearings

Transmission & Driveline

Optimized VVA and EGR

Aerodynamics

Advanced fuel injection

Advanced boosting systems

Hybridization

range of scenario outcomes

Add graphics. Add numbers?

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Findings Overall Truck Energy Use

Fuel use grows over time, more slowly than vehicle-miles traveled
10

Annual Fleet Vehicle Energy Consumption, Quadrillion BTUs

500 Annual Fleet Vehicle Miles Traveled, Billions of Miles

2010

2035

2050

Findings Diesel

Diesel remains the dominant fuel for heavy trucking

The future fleet of heavy trucks is majority diesel in all future scenarios Diesel hold advantages of the incumbent
mature infrastructure engine & vehicle technology optimization

Due to fuel economy technologies, diesel is a moving target

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Heavy Duty Fuel Options

Liquid Biofuels : Biodiesel and Ethanol Advantages

High energy density Suitable for blending w/ hydrocarbons

Disadvantages
Feedstock availability, especially for low-cost biodiesel Immaturity of cellulosic technology

Findings - Biofuel

Biofuels will play a limited role, due to limited availability of cost-effective biodiesel
MD gasoline engines use ethanol blends Cost-effective biodiesel is supply-limited in the long term
20%
Percentage of Total Heavy-Duty Energy Use (class 3-8)

15%

ethanol - % of total biodiesel - % of total

10%

5%

high oil price

medium oil price

2035

2050

medium oil price

high oil price

low oil price

low oil price

0%

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Heavy Duty Fuel Options

Natural Gas: Compressed (CNG) and Liquefied (LNG)

Advantages
Potentially lowest fuel cost Domestic supply Low greenhouse gas emissions

Disadvantages
Infrastructure not widely available Fuel system expense Reduced energy density & range

Natural Gas Fuel Price Scenarios

Developed from DOE-EIA Annual Energy Outlook

$7.00 $6.00
Dispensed Fuel Price, $/DEG (diesel-equivalent-gallon)
Diesel, high oil price s

cenario

$5.00 $4.00 $3.00 $2.00 $1.00 $Dies ediu el, m

pric m oil

e sce

nario

nario LNG: e sce nario il pric e high o il price sc ario o n med. price sce il low o

Diesel, low oil price scenario

2010 2015 2020 2025 2030 2035 2040 2045 2050

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Findings - Natural Gas

Natural gas is cost effective in some scenarios

Example #1: medium oil cost scenario in 2020
diesel in green
$350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $-

Diesel: 3-year cost, vehicle plus fuel: $311,729

s l co t
year 3

fue

year 2

LLR Case, 2020. 125,000 miles/year assumption

Findings - Natural Gas

Natural gas is cost effective in some scenarios

Example #1: medium oil cost scenario in 2020
diesel in green, natural gas in red
$350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $Natural gas vehicle cost premium

Vehicle price

year 1

Diesel: 3-year cost, vehicle plus fuel: $311,729

c fuel o st
year 3 year 2 year 1

Natural Gas: 3-year cost, vehicle plus fuel: $299,612

Vehicle price

In this scenario, natural gas investment provides slight economic gain over 3-year timeframe

LLR Case, 2020. 125,000 miles/year assumption

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Findings - Natural Gas

Natural gas is cost effective in some scenarios

Example #2: high oil cost scenario in 2025
diesel in green
$400,000 $350,000 $300,000 $250,000 $200,000

Diesel: 3-year cost, vehicle plus fuel: $380,917

fue

s l co

t
year 3 year 2 Diesel 1-year cost, vehicle plus fuel: $224,213

Vehicle price

$150,000 $100,000 $50,000 $-

year 1

LLH Case, 2025. 125,000 miles/year assumption

Findings - Natural Gas

Natural gas is cost effective in some scenarios

Example #2: high oil cost scenario in 2025
diesel in green, natural gas in red
$400,000 $350,000 $300,000 $250,000 $200,000 Natural gas vehicle cost premium

Diesel: 3-year cost, vehicle plus fuel: $380,917 NG: 3-year cost, vehicle plus fuel: $289,875 year 3 year 2 year 1 Diesel 1-year cost, vehicle plus fuel: $224,213 NG: 1-year cost, vehicle plus fuel: $213,023

$100,000 $50,000 $-

Vehicle price

$150,000

In this scenario, natural gas investment breaks even in less than 1 year

LLH Case, 2025. 125,000 miles/year assumption

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Findings Natural Gas

Natural Gas may play a strong role, if low price differential (of natural gas versus diesel) persists over time

low oil price scenario

medium oil price scenario

high oil price scenario

diesel vehicles hybrid vehicles natural gas vehicles

Shown: Class 7&8 Fleet Composition in 2050

Natural Gas Infrastructure

While gas pipeline infrastructure exists today, NG station investment hurdles will take time
Major U.S. Freight Routes Natural Gas Pipelines

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Heavy Duty Fuel Options

Hydrogen and Plug-In Electric Power Advantages

Very high theoretical efficiencies Low fuel cost (electricity)

Disadvantages
Technology maturity Low energy density Durability & life

Findings - Hydrogen and Electricity

Hydrogen and plug-in electric power will play a limited role, due to technology hurdles for heavy truck application

Battery and fuel-cell technologies still lag heavy-duty requirements Some niche exceptions exist
Some medium-duty delivery trucks are strong candidates hybridization Light urban delivery trucks are targets for fullelectrification

Durability and cost are an ongoing concern for these technologies

Both issues are magnified in heavy truck markets, as compared to light-duty/car markets

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Heavy Duty Fuel Options

Coal-to-Liquids and Gas-to-Liquids Technologies Advantages

Abundant domestic supply Plentiful low-cost feedstocks

Disadvantages
Capital Intensity Competition with direct pathways

CTL Barriers

Capital Cost is a Major Barrier to Coal-to-Liquids (CTL) Coal-to-liquids plants are major capital projects To justify investments in CTL plants, sustained high oil prices would be necessary:
Baseline capital cost assumption CTL justified at roughly $130/bbl oil price High capital cost assumption CTL justified at roughly $240/bbl oil price

Capital requirements are the major challenge to further CTL investment

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Findings - Summary

Future mix of truck energy use

1.4
Heavy Truck Energy Use, billions of barrels oil equivalent

1.2 1 0.8 0.6 0.4 0.2 0

diesel

gasoline

biofuel

natural gas

baseline

2010

low oil price

medium oil price

high oil price

low oil price

medium oil price

high oil price

2035

2050

Findings

Heavy Duty Summary

1. There are opportunities for significant fuel economy improvements in diesel powered trucks 2. Diesel remains the dominant fuel used for trucking 3. In class 3-6 medium-duty trucks, advanced gasoline engines are strong competitors to diesel engines - due to costs of recent emission controls

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Findings

Heavy Duty Summary

4. There is potential for natural gas to gain significant market shares, if the price spread between natural gas and diesel persist over time. 5. Market share of HEVs in medium- and heavy-duty truck markets may increase in specific market applications.
- However, faced with technology and cost barriers, projected market share is low.

6. Biofuels are projected to play a limited role in overall truck energy use.

Q&A

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