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A Look at Natural Gas

A Look at Natural Gas. FAPT– 2/21/14 craig.h.weerts@cummins.com. Agenda . Florida HB579 A look at some basics How do I educate myself? Economic Considerations Operational Considerations Questions. HB 579 (Nat Gas Development). Takes Effect January 1, 2014 thru December 31, 2018

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A Look at Natural Gas

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  1. A Look at Natural Gas FAPT– 2/21/14 craig.h.weerts@cummins.com

  2. Agenda • Florida HB579 • A look at some basics • How do I educate myself? • Economic Considerations • Operational Considerations • Questions Cummins Confidential

  3. HB 579 (Nat Gas Development) Takes Effect January 1, 2014 thru December 31, 2018 • (1)Tax Free Holiday (Auto Fuel Only) • LNG • CNG • Propane • Beginning January 1, 2019 • Nat Gas Taxed $.21 (dge) • Diesel Taxed $.31 (g) • (2) $6 million per calendar year in rebate funds available to offset vehicle premium • Maximum $250,000 per applicant • Maximum $25,000 per vehicle • Maximum 50% of incremental cost • Purchase in prior year

  4. Might Be A Deal – But Is It?Some Basic Facts • Natural Gas is primarily Methane • Methane – CH4 is the most basic hydrocarbon • The higher the ratio of hydrogen to carbon, the lower the “carbon footprint” • Natural Gas has a net 25% reduction in “Greenhouse Gas” wellhead to wheel • CNG, LNG, and RNG are essentially the same thing • Natural Gas is lighter than air and goes up • Gasoline, diesel, and LPG are heavier than air • LNG starts heavier but becomes lighter Cummins Confidential

  5. More Facts • Energy Density Index varies by fuel • Diesel - 100 • Gasoline - 90 • LPG - 67 • LNG - 58 • DME - 53 • CNG - 28 Cummins Confidential

  6. And More • Natural Gas is a commodity sold by million BTUs • There are 7.213 DGE in one MBTU • This year price has ranged from about $3.30 to about $4.50, a range of about 36% • Impact on DGE is $0.46 to $0.62 for gas only • Balance of price is processing, distribution, and taxes • Transportation is a minor portion of demand for Natural Gas Cummins Confidential

  7. How Do I Learn? • NGVAmerica – (www.ngvc.org) • Cummins Westport – (www.cumminswestport.com) • Work with an expert (Paid consultant) • Your schoolbus OEM • Your Cummins Distributor Cummins Confidential

  8. CWI Natural Gas Academy(www.cumminswestport.com/natural-gas-academy-videos) • Video 1 – What is Natural Gas • Discussion of CNG, LNG, and RNG • Features, benefits, and shortcomings of each • Video 2 – Natural Gas Engines • Discuss difference with gas or diesel engines • Look at spark ignited, compression ignited, and dual fuel • Video 3 – Natural Gas Fuel Systems • What is different versus gas or diesel • What is different CNG versus LNG • Importance of fuel choice and tank sizing Cummins Confidential

  9. CWI NGA Continued • Video 4 – How to Fuel a Vehicle • Discuss what is involved in fueling with CNG and LNG • Discuss safety and training • Video 5 – Natural Gas Engine Maintenance • Discuss differences and similarity with diesels • Spark Plugs, Different Oil, Daily Requirement • Video 6 – Upgrading your facility for Natural Gas • NFPA 30A • Local fire marshall • Videos 7 & 8 – Walk around of ISL-G and ISX 12G Cummins Confidential

  10. Background Done, Time To Evaluate • Economic Considerations • Price of Diesel Versus Natural Gas • CNG or LNG available now • Gas line available for CNG station • Partnership available to share cost/facility • Sufficient volume to attract investor or own • Added maintenance cost • Training of staff • Facility modifications • Confusion factor Cummins Confidential

  11. Continued • Economic • Schoolbus premium • Fuel tank size • Right size engine available • Residual Value • Incentives • State of Florida • Federal • Other states • Value of “Green Image” Cummins Confidential

  12. Operational Considerations • Routes • Length of route • Fuel availability/distance to fuel • Performance Requirements • “Right bus avaiable • “Right Engine” Available • Facility modifications • Technician and Driver training Cummins Confidential

  13. Natural Gas Playbook February 21, 2014

  14. Natural Gas Playbook Elements Step 5 Operate Step 1 Assess Step 4 Implement 5 Step Playbook Step 2 Specify Step 3 Prepare Cummins Westport Confidential

  15. CWI Playbook Process 2 1 5 4 3 Operate & Maintain Assess Specify Prepare Implement Fleet profile OEM Confirm fuel availability Conduct fuel quality test Conduct daily maintenance & inspections Routes & loads Chassis Conduct pilot truck test Confirm service & parts availability Environment & terrain Engine Current fuel profile Complete facility modifications Confirm fuel economy & range Monitor fuelling procedures Transmission & gearing NG fuel availability Develop rollout plan Obtain permits, licenses & approvals Monitor fuel consumption Fuel price expectations Fuel type & quality Truck delivery & PDI Operations & maintenance training Service capability Conduct scheduled maintenance & inspections Conduct driver training Fuelling procedure Incentives Safety training NG fuel system type, capacity & configuration Conduct fuelling training Regulations & codes Fire & emergency response plan Conduct scheduled fuel quality inspections Facility requirements Test problem resolution processes Safety equipment Previous experience Define driver training process Warranty package Manage & resolve problems Business case Infant care support Define problem resolution processes Delivery dates Risks & mitigation Kick off event Cummins Westport Confidential

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