GM Deal Near on Building Trucks Using Natural Gas
General Motors Corp., the nation’s largest auto maker, is near an agreement with gas companies in California and Texas that would lead to the first commercial production of natural gas-powered trucks, a Southern California Gas Co. official confirmed Tuesday.
Ford Motor Co., the No. 2 American auto maker, is in similar talks, but is unlikely to reach an agreement before early next year, said Roberta Nichols, manager of Ford’s alternative fuels department.
An agreement by GM would make it the first major auto maker to produce such vehicles for the open market. Air quality officials say such vehicles run significantly cleaner than conventional gasoline-burning trucks.
Texas officials had planned an announcement of the project today, but GM asked them to postpone it. The company is still working out final details of the agreement, under which Southern California Gas and other utility companies would finance $1.13 million in research that would lead to production of the low-smog trucks for sale in California and Texas, said B. Jack Smith, natural gas vehicle market development manager for the gas company.
Chrysler Corp., the third major American auto maker, is also discussing the possibility of making vehicles that run on natural gas, but it is not as far along as the other two car companies, according to officials familiar with the talks.
If GM proceeds with its plans, it would give a significant boost to efforts by the gas industry, led by the American Gas Assn., to put more natural-gas-burning vehicles on America’s highways to help meet proposed clean air requirements.
GM, through its GMC Truck Division, would produce at least 1,000 half-ton, natural gas-burning Sierra pickups beginning as early as January to be marketed to public and private fleets, said David Polletta, general manager of PAS Inc. in Troy, Mich. PAS is a subcontractor negotiating with GM to assemble the trucks.
The vehicles would probably be modifications of trucks designed to run on gasoline, a source familiar with the technology said.
The program could be expanded over the next several years to include a full line of trucks, from small pickups to trash haulers, Smith said. Total cost of the research program could exceed $20 million, depending on the program’s scope, he said.
The potential market for such trucks is huge--between 25% to 50% of the 1 million fleet vehicles now operating in Southern California alone, Smith estimated. For the gas company, that would mean as much as $205 million in additional annual revenue from natural gas sales.
General Motors officials declined to comment on their plans and said they would have no comment for at least a couple of weeks.
The agreement is being worked out among GM, Southern California Gas, Pacific Gas & Electric and San Diego Gas & Electric in California, and Entex, Enron Corp., Southern Union Co. and Lone Star Gas Co. in Texas.
GM’s plans are only the latest development in a surge of projects to build vehicles that run on fuels other than gasoline. Last month, GM and Ford both announced plans to supply California with thousands of so-called “flexible fuel vehicles”--cars that can run on both gasoline and methanol or ethanol. In January, GM unveiled a prototype electric car, but it has not said whether it will go ahead with production of the car.
Previous efforts since the 1970s to market natural gas-powered vehicles languished as gasoline prices fell enough to make natural gas economically unattractive, observers said.
There are about 30,000 natural gas-burning vehicles in the country, but only a couple of hundred in California, mainly as test projects or in utility company fleets, said Vicki Cho, a Southern California Gas spokeswoman.
Southern California Gas itself once fielded a fleet of 4,000 natural gas-powered trucks, Cho added, but phased them out when gasoline prices fell. The company now has only five such vehicles that it uses for demonstration purposes.
But interest in building natural gas-fueled vehicles has revived as Congress, the California Air Resources Board and other state agencies are drafting stringent new clean air rules--some of which would eventually require abandoning gasoline in favor of alternative fuels. Natural gas, which is abundant in the United States, presents an attractive alternative, air quality officials argue.
Natural gas vehicles would produce about half the hydrocarbon emissions as a comparable gasoline vehicle. A reduction of that magnitude would meet clean air requirements under consideration by the California Air Resources Board for 1994, said board spokesman Bill Sessa.
But there are problems with the vehicles. Although natural gas producers, including Amoco Corp., and utilities, including PG&E;, have said they will open public natural gas refueling stations, there are very few such stations in the United States. As a result, natural gas-powered vehicles are best adapted to fleets that return every evening to a central location, where a natural gas compressor could be installed.
In addition, natural gas provides about one-fourth the range of an equal volume of gasoline, requiring natural gas vehicles to have large tanks. Moreover, “a couple of the different companies (that supply natural gas) have said that if demand increased substantially, they won’t have enough pipeline capacity to deliver it,” said Nichols at Ford.
Cooperation between GM and the gas companies was spurred in part by Texas Land Commissioner Garry Mauro, who helped draft legislation to promote the use of alternative fuels by public agencies in his state.
