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Clean Energy sees Total investment plans as 'watershed moment' for gas trucking

Clean Energy Fuels Corp. sees Total SA's planned investment in the company and its appetite to facilitate leasing for heavy-duty natural gas trucks as a turning point for natural gas transportation.

While Clean Energy has worked with other industry partners — such as Chesapeake Energy Corp. and General Electric Co. — in the past, Total's plan to buy a 25% stake in the company represents a more substantial partnership with greater collaboration potential, Andrew Littlefair, Clean Energy CEO and president, said during a May 10 conference call.

That a major oil-focused company has expressed such interest in a natural gas transportation business could send a meaningful signal to the marketplace, he said. "Total's got skin in the game. ... They didn't want to be a casual investor," Littlefair said during the call. "I think this is a watershed moment."

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In addition to the planned $83.4 million stake in Clean Energy, Total plans to provide up to $100 million of credit support for a Clean Energy vehicle leasing program. With that funding, Littlefair expects to be able to help fleet owners lease upwards of 2,500 vehicles — maybe more, if state grants cover additional costs.

Clean Energy has been communicating with fleet managers for some time, Littlefair said during the call, and he has heard repeatedly that the incremental cost of natural gas trucks relative to diesel trucks is one of the main stumbling blocks for operators who want to transition their fleets.

The incremental cost for a natural gas heavy-duty truck is typically about $40,000, according to Littlefair.

In addition to covering the incremental costs of leasing natural gas trucks, the program also guarantees a 50-cent-per-gallon discount on natural gas fuel price relative to diesel. "The market has never seen this kind of offering before," Littlefair said.

Natural gas' appeal as a vehicle fuel tapered off when oil prices fell in 2014, but diesel prices have recently reached a three-year high, improving the competitiveness of natural gas.

Clean Energy and Total's leasing program will target heavy-duty truck markets in Texas, California and other areas where Clean Energy has already established refueling networks, according to Littlefair. The companies see high-mileage fleets as the best target for the leasing program given the fuel discount component of it, Littlefair said. Operators using 15,000 to 20,000 gallons per year would get more benefit from the fuel discount than trucks with lower fuel usage.

The company has built up natural gas fueling infrastructure in North American and plans to maintain its focus on this region, according to Littlefair.