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Natural Gas Vehicle Industry Exec: North America Is the Next Big Thing

Join Motley Fool analyst Brendan Byrnes for a conversation with Ian Scott of Westport Innovations. Scott is the executive vice president of Westport's on-road systems segment, which works with OEM partners such as Ford, Volvo, Kenworth, and Peterbilt to produce natural gas-powered vehicles in the U.S. and elsewhere.

Developments in North America are exciting to Westport, as natural gas extraction increases and prices remain low. In the following video, Scott discusses the company's hopes for the North American market, as well as the possible impact if natural gas were to be exported to Europe or Asia.

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To watch the full interview, click here.

Brendan Byrnes: If you had to name one area of the on-road systems segment that you're most excited about over the next year or two, what would it be?

Ian Scott: Don't do that to me.

Byrnes: I have to. I have to.

Scott: Don't do that to me. You know, it's interesting because most of our products -- maybe what I'll do is I'll spin that and turn it into a geography, because I think North America, what's happening right now is really exciting.

If you look at the first decade of the century, we saw North America being a laggard. There wasn't a lot of natural gas growth for vehicles and transportation, whereas in other jurisdictions globally it was growing quite aggressively.

With the shale gas right now, and the new extraction techniques, the economics is completely changing. We see our global OEM partners looking at North America as being the next big thing.

With on-road, most of the products that we've just talked about -- with the exception of the Volvo V70 product -- are sold in North America. Pickup trucks, the heavy-duty trucks, continued growth from our Cummins-Westport joint venture as well. Maybe in the future Volvo Cars and others.

I think this is very exciting for us right now.

Byrnes: Does Westport worry about exporting natural gas from North America, maybe to Asia, where prices are much higher, or to Europe, where prices are also higher, that that will have an impact on the price of natural gas -- bring it up -- maybe less demand for Westport services in the future?

Scott: In North America?

Byrnes: Mm-hmm.

Scott: Well, if you look at what the actual forecasts are -- the reserves, the new discoveries -- it's just tremendous. When you look at the studies about if exports -- first of all, are we going to be allowed to export large quantities? If we are, you look at what most of the studies are saying with respect to the impact. It's not going to be significant in the near term.

What you also have to remember is you're working on the differential price between natural gas and diesel or gasoline, the petroleum fuels. Right now, it's oil at $80 to 100 a barrel recently. What's going to happen if the economy really starts to take off, either here in North America or globally?

If oil prices go up -- even in the long term, if natural gas prices did go up -- you still have the significant differential that most experts agree is going to probably only increase in the future.

Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2013, at 2:27 PM, comosichiam wrote:


  • Report this Comment On September 03, 2013, at 10:10 AM, jjbowen wrote:

    If an adequate natural gas infrastructure for transportation use is ever put in place, it could be a major source for clean transportation fuel. Until then, its use will be spotty based on where there is infrastructure.

  • Report this Comment On September 03, 2013, at 7:38 PM, ScottAtlanta wrote:

    Nice to get an answer in that interview re: the likely increase in exports in NG on later prices and the market in N. America. So, he says, not only is there great abundance which will mean minimal impact of exports on price/adoption but also the relative costs of a barrel of oil in a growing global economy (e.g., BRICs) will make NG even more of a bargain even if the price were to rise a bit.

    I wish I could remember where I buried that jar of cash....

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