Monarch Beverage Co. will spend $7.6 million to convert 80 percent of its trucking fleet to run on compressed natural gas in a move it says will save money and reduce emissions.
In a sign of the rising popularity of natural gas engines, the Indianapolis-based distributor of alcoholic beverages put three compressed natural gas, or CNG, trucks into service a year ago and added 12 more of them in September.
On Tuesday, Monarch announced that it will add 13 more trucks with CNG engines this month, and ramp up to 85 by the end of 2015. The engines are made by Cummins-Westport Inc., a joint venture of Columbus-based Cummins Inc. and Vancouver-based Westport Innovations Inc.
To provide CNG fuel for the new trucks, Monarch is also building a $2.3 million CNG fueling station at its warehouse at 9347 Pendleton Pike. The site is set to open in March.
Fred Dufour, Monarch’s senior vice president of operations, said it’s a good time to switch away from diesel fuel, which he believes will grow in cost, to natural gas, which has seen a boom in supply in the United States from newly available shale gas.
“We started to become concerned that with the growth of China and India, demand [for diesel] could outstrip supply,” said Dufour, who predicted that could occur sometime between 2015 and 2018, leading to diesel prices of $7 per gallon by 2018.
Even right now, the price differential is significant. Monarch locks in diesel on contract for $3.85 a gallon. But it can buy natural gas for $1.55 per gallon.
Since its trucks burn roughly 1 million gallons of diesel per year, converting 80 percent of them to natural gas could save Monarch $1.8 million per year.
CNG trucks cost at least $60,000 more than a similar-sized diesel trucks, in large part because their fuel tanks have to be able to withstand the higher pressures that force natural gas into a transportable-sized volume.
But Dufour figures the fuel savings will allow Monarch to pay off the new trucks within three years, based on the number of miles Monarch’s trucks typically drive.
It’s easier for Monarch to adopt CNG engines because its trucks always begin and end their days at the company’s headquarters. So they don’t need to find fuel while on the road.
But Dufour expects CNG engines to rise in popularity beginning in 2013. General Motors Corp., Ford Motor Co. and Chrysler Corp. all announced this year new pick-up trucks with hybrid gasoline-CNG engines, Dufour noted. If those trucks prove popular, he expects more gas stations to add CNG pumps.
Right now, there are 13 CNG filling stations around Indiana, and and about half of them are open to the public, Dufour said. For the past year, Monarch’s three CNG trucks have been using the CNG fueling station operated by Indianapolis-based Citizens Energy Group, which is called Green’s Auto & Truck Service. It is located at 111 W. Raymond Ave.
“We will see a lot more of it," Dufour said. “I think this is going to just start to roll.”