Precious Gas!

I am back from Peru, where I indulged in my new hobby: a random act of journalism!  I have long railed at Zero Hedge and elsewhere about why America is unable to use our abundant natural gas resources as a vehicle fuel, as Peru has done, now for some years now.  Because one of Ameru's own delivery vehicles can use LPG (terms defined below), I found it fairly easy to get some information.

The reason I think this is important is that the savings are compelling.  It costs about $1000 to convert a vehicle to use LPG or compressed natural gas (GNV in Peruvian Spanish), but the cost of the fuels are both so cheap that the money is recovered in just ONE YEAR, a fantastic return on capital, an idea that Ameru is very conscious of.  The estimates they gave me are that natural gas fuels are about 50% cheaper than gasoline.

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Natural gas and its products have terminology that is a little confusing, so allow me to define some terms and pass along other relevant information before getting to our own case.  First, natural gas ("NatGas" in this article) is usually mostly methane (CH4), the molecule makes a perfect tetrathedron (for you math folks, from Wikipedia)):



Methane makes up about 90% or so of most natural gas that comes out the ground.  Methane and other NatGas components ethane, and propane are found as liquids at room temperature and pressure.  A nice article is found (where else?) at wikipedia: http://en.wikipedia.org/wiki/Natural_gas.

NatGas needs to be processed before it can be used as fuel.  Impurities like carbon dioxide (CO2) and hydrogen sulfide (H2S -- very poisonous!).  Usually, components like propane and butane are taken out, often used and used as fuel or other uses.

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Liquified petroleum gas (LPG, or in Spanish GLP) is mostly propane and butane.  Wiki:  http://en.wikipedia.org/wiki/Liquefied_petroleum_gas

We use GLP (I am using the Spanishacronym as there might be slight differences between LPG and what is sold for fuel in Peru) in one of our vehicles, a mini-minivan (made by Suzuki and not found in the USA).  They modified it about a year ago for the $1000 mentioned above.  Actually our vehicle runs on BOTH gasoline and GLP.  Here is a photo that I took from below our van, that (unclearly) shows the GLP tank (top left extending to top-center, out of focus, near the camera and above the differential housing) as well as the gasoline tank (with the faint corrugated metal ribbing in the center-right lower background, to the upper left of the leaf springs):

Here is a picture of our Sales Manager paying for 50 soles worth of GLP, you can see "GLP" faintly written near the top of the picture on the pump.  Note the different ("pistola" (handle)) connected to our vehicle has the GLP goes in, under pressure so it is in liquid form):

"PECSA" is one of MANY gasoline (and other fuel) companies in Peru.  The below are two pictures of the special bronze "cap" (valve) that you must use to fill up a tank with GLP.  Note the regular gasoline cap as well nearby), the first one showing the bronze cap attached (it screws in), the second better shows the funnel shape of the piece.  Both picture are taken from "above".

I was told by both the manager of the station and our own Sales Manager that a "tank" of GLP will run the vehicle for about 250 - 300 kms (call it 150 - 200 miles).

GLP arrives by truck to the stations, in a compressed tank (to keep it liquified).  They hook it up to piping like this to put into their own underground storage tank:

The same station sells both GLP and GNV (Gas Natural Vehicular -- defined in a moment).  If you look closely you can see two small red signs that say GLP and one small white sign(just above and partly blocking) the "market" sign in center) that says GNV:

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While GLP is very "green" (fewer emissions), even cleaner is natural gas, or in Peru GNV (Spanish acronym for Compressed Natural Gas for Vehicles).  This gas comes off a spur of the pipeline itself that runs from the Camisea SE Peruvian jungle gas field in Amazonia.

The manager of the station above told me that GNV is the "future" in Peru, that more vehicles will be running on it vs. GLP.  The below picture is from another station (Primax, used to be Shell) where if you study the photo you can read Gas Natural Vehicular, the real name for GNV), look at the signs on the two sets of pumps with blue columns:

GNV is lightly treated, more can be read at Wikipedia:

http://en.wikipedia.org/wiki/Compressed_natural_gas

Also perhaps of interest is the fact that part of Peru's central railway has some of its locomotives powered by NatGas.  I have never been on this rail trip up into the Andes, but it is supposed to be spectacular:

http://en.wikipedia.org/wiki/Ferrocarril_Central_Andino

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I have been wanting to write something decent about Peru using their resource in a constructive way.  It took time and investment money to build the infrastructure, some of which you see above.

If Peru can do this, why can't we?  Peru is poor and a much smaller place than the USA.  We could do something similar and get much more energy independent!  I even read an article while there about the USA having so much more NatGas than Peru does, and that out HUGE deposits may prevent Peru from developing some industry based on NatGas (almost all plastics come from NatGas)...  THEY are worried about our huge resources, and yet it is the environmentalists HERE who get the press...

The USA has a great opportunity to become more energy independent, add jobs, increase jobs and emit less pollutants (as Al Gore would want us to do).  WHY are we not doing this as a crash program???

I do know that we have started (some city buses run on NatGas and diesel engine giant Cummins is working on a NatGas fueled engine for over-the-highway trucks), so there is some motion underway.

Keep an eye for opportunities to invest...  I myself may buy some Cummins Engine stock (CMI).