Clean Energy Fuels (NASDAQ:CLNE) was a little ahead of the curve with construction of its fueling stations for heavy-duty trucks, but in the video below, CEO and co-founder Andrew Littlefair tells us now that the Cummins (NYSE:CMI) and Westport Innovations (NASDAQ: WPRT) jointly built 12-liter natural gas engine is out, operations are expected to pick up quickly. United Parcel Service (NYSE:UPS) is leading the way, having already ordered more than 1,000 LNG trucks, with plans to take most of them for delivery this year. UPS' and other large shippers' leadership position will create a "base load" to support Clean Energy opening stations. This will then allow smaller truckers to adopt natural gas.
Clean Energy Fuels is the leading provider of natural gas for transportation in North America. Clean Energy provides CNG and LNG fuels to solid waste, trucking, and transit fleets, among others, and currently operates some 500 fueling stations in the United States and Canada, as well as manufacturing related equipment and technologies.
When it comes to its "America's Natural Gas Highway" -- the company's expansion into natural gas refueling stations for over-the-road heavy trucks -- Clean Energy has almost 30 stations opened, with some 60 more ready to go as heavy-duty truckers order trucks. With a current goal of 150 total stations, finishing the year with the majority of the 90 stations already built, open for business, would be a huge step forward.
Andrew Littlefair: Now, on America's Natural Gas Highway, our job one is to open these stations. You correctly mentioned that the 12-liter engine from our friends Cummins Westport, a 400 horsepower engine, really didn't get produced until about August.
It takes a while. If you're a trucker, you order that thing and it goes through the dealer and it gets made, it goes to the factory, and ends up in a chassis and then it gets delivered to you and you put decals on it and everything -- it takes a while. It's about a four-month process.
We're just beginning to see these trucks roll in now. That's why we're beginning with the stations. If there was a criticism of us, it was that we built some stations a little bit too early.
Jason Hall: Nobody else was going to do it.
Littlefair: No one else was going to do it, but you don't want to die on the beach on that!
But on the other hand, there was a good offshoot of it. We really changed the paradigm. The discussion between the truckers and the shippers, it was pretty easy for a good contract here to say, "Hey, Mr. Shipper, I'd like to do this but there are no stations." But we've changed that, because we have these stations now every 250 miles, down the I-10, the I-40, the 95 and the 5.
Is it a perfect network? Of course not. But it's really changed the dialogue between those shipping companies and these consumer companies and their haulers.
The engine was delayed. I don't want to pick on my friends, but when we cooked this plan up, we worked on it with our friends at Cummins and that engine was really supposed to be here almost a year earlier.
That's all right. This, I think, is the most successful launch of a new product that they've had, is what I think I've been told. Knock on wood, it's working well. It took some time to make sure it was right, so those engines now are coming. We got a little ahead on the station build, but they're there, and they're starting to open now.
Job one for us this year is to open a bunch of those stations. We'll try to get a majority of those open. We'll also, where necessary, add CNG -- either LCNG at those stations, or CNG -- but that will be customer-driven, and we're doing that now. We have five LCNG -- LNG stations that will have CNG at them -- we have five of those under way right now.
Now, I think part of your question was what are we hearing, what are we seeing? Today we have 220 LNG fleets that we're selling fuel to -- some of them are small, some of them are big -- and we have about 140 CNG fleets, and we're seeing a mix.
It looks to us, and I was listening to David Demers, CEO of Westport the other day -- it's breaking down around 50/50 or 60/40. But we're still real early in this.
Hall: A lot of that's driven by fleets that are testing if CNG is accessible.
Littlefair: And CNG is pretty accessible for a fleet. If you're here and you want to try a couple CNG trucks, that's pretty easy. You may go to a station that wasn't really designed for you, but you can still make it work, so you're seeing some of that.
I think some people have been drawing some conclusions based on pretty skinny numbers. We have some big LNG customers. UPS is one of them. UPS is currently fueling at seven of our stations, and they've got several hundred more trucks to take. We're bulk supplying them in some places where they don't actually fuel with us, but we're supplying the fuel.
But we have other big fleets like CR England and Dillon and Raven, who hauls for MillerCoors, and NFI, who hauls for Lowes. These are big LNG customers. They're serious logistics operators, they know what they're doing and a lot of them are trying LNG and some of them are also trying CNG.
Hall: We're seeing stations, two to three a month, opening right now.
Littlefair: Yes. I'd love to tell you that every month I'm going to open three stations. We have about 60 stations that need to open.
Hall: They're built and just ready to turn the key.
Littlefair: They're ready to turn the key. There's not really any other CAPEX required -- well, there's about a $10,000 commissioning kind of thing we go through; we have to put some fuel in it and all -- but they're ready to go.
Our job around here is to get a majority of those open this year so yes, you'll see it's a little lumpy where we're waiting for these trucks to deliver, but you'll be seeing them open in twos and threes. The nice thing is, once we do that there's a couple things that happen.
You're opening them when you get probably 20 trucks, usually. That's the way you should do it. Then once you open a station in Amarillo, Texas, for instance, then you begin to work the area. Now people can try one or two trucks, so our sales team is doing both. We're trying to base load these stations, get them open, then we also go to work on broadening the fleet base at those particular locations.
The other thing that happens, Jason, is we're beginning, over time here -- and you'll see it in the next several months -- other segments are opening up. When you do Amarillo ...
Hall: Somebody in Amarillo that's going somewhere else ...
Littlefair: ... that's going to Albuquerque. It's beginning to happen, so it's kind of exciting.
Hall: That's great. That's definitely what we're looking to hear, no doubt about that.
Jason Hall owns shares of Clean Energy Fuels and Westport Innovations. The Motley Fool recommends Clean Energy Fuels, Cummins, United Parcel Service, and Westport Innovations. The Motley Fool owns shares of Cummins and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.