The Metropolitan Utilities District has the green light for a new compressed natural gas station in Sarpy County that district officials say will be a game-changer.
The project, planned for a two-acre slot in the Hilltop Industrial Park at 132nd Street and Cornhusker Road, will be MUD’s third station in the metro area to offer compressed natural gas. The station will have dispensers for light and medium vehicles, but the primary users will be over-the-road truckers.
The Sarpy County Board already has approved zoning for the site. The MUD board voted 6-1 Wednesday to approve a memorandum of understanding with Werner Enterprises, which has pledged an anchor fleet of 10 compressed natural gas-powered semitrailer trucks.
“We hope to have a line of trucks ready by Aug. 1,” said Mark Doyle, the district’s interim president.
Board member Steve Patterson raised concerns about the project when it was floated last year, and he voted no Wednesday because MUD managers didn’t provide financial data on the deal until the morning of the vote. He said he would be shirking his fiduciary duty to ratepayers to approve a project he hadn’t analyzed properly.
“I support CNG,” he said. “But how we do this matters.”
Under the agreement, Werner will buy 1.1 million diesel-equivalent gallons of the fuel at $2.15 per gallon over the 40-month expected life of the trucks.
MUD, in turn, will pay Werner $300,000 to offset the cost of buying trucks that can run on natural gas. The money will come from a Nebraska Environmental Trust grant the district won last year.
Werner runs about 7,200 trucks. Including the 10 new ones, it will have a few dozen running natural gas by the end of the year, said Steve Phillips, Werner’s senior vice president of operations.
He said this deal makes sense because natural gas is cheap, plentiful and domestically produced, and he believes equipment costs — one of the biggest barriers to expanding the natural gas fleet — will come down as the market matures.
“There’s a lot of interest nationally for the product, and we have a lot of interest from our customers,” he said.
MUD has signed three smaller agreements with other trucking companies, and Doyle is optimistic that interest will grow once the station is up and running. He said the deal puts MUD at the forefront of a growing segment of the natural gas business, a play that ultimately will benefit ratepayers.
Although the consumer market for cars powered by natural gas hasn’t taken off, the outlook for its use as a transportation fuel is strong for fleets, Doyle said. Locally, for instance, the sales volume at MUD’s 54th and L station has doubled in two years.
Also, it’s significant that the new station will be adjacent to a new Omaha Truck Center sales and service center for natural gas trucks, creating a one-stop shop for natural gas-powered semis moving freight through the Midwest, he said.
“This is going to be a nationally recognized project,” he said.
MUD will own the land and supply the fuel, but a third company — Trillium — will build and own the station.
Initially, MUD administrators had floated the idea of building the station itself at a cost of about $3 million. But that wouldn’t have been a good fit, said Deb Schneider, chief financial officer.
“We played in the retail market, but (sales) is not our core competency,” she said.
The district will put a half-million dollars into developing the site, and Schneider’s conservative estimate was a 10-year payback period. But that assumes little growth in the market, she said.
If a 50-cent-per-gallon federal tax credit for compressed natural gas is reinstated, that could net the district an additional $100,000 annually. According to the agreement, Werner would get 30 percent of that.
“It’s gravy if that happens, for both of us,” Schneider said.