Malaysia rolls out red carpet as Saudi king kicks off Asia tour
* King Salman arrives in Kuala Lumpur for start of rare Asian tour
LOS ANGELES Jan 31 Blu LNG, one of the biggest names in the move to wean U.S. trucks off diesel onto natural gas, has laid off 20 percent of its staff, ousted several senior executives and slowed down development of fueling stations as it waits for more truckers to embrace the switch to the cheap and cleaner-burning fuel.
The move, confirmed by the company's Chief Executive Officer, Merritt Norton, and other people familiar with the situation, marks an important pullback in a nascent sector that is expected to improve U.S. energy security, lower transportation costs and create jobs.
Just three days ago, President Barack Obama threw his weight behind the industry in his State of the Union speech. "Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas," Obama said.
Blu a year ago pledged to build dozens of liquefied natural gas fueling stations along U.S. highways in 2013 with the help of millions of dollars from ENN Group, one of China's largest private companies.
But fueling stations need customers, and trucks that run on natural gas have been slower to hit the market than many anticipated and are still far more expensive than their diesel equivalents, making even the allure of far cheaper fuel difficult to swallow for many fleet owners.
"This year is a year of trying to let the trucks catch up to us," Blu CEO Norton said in an interview.
Regarding Obama's remarks this week, Blu said it appreciated the president's comments and would like to see a federal effort to bring the fuels tax on LNG in line with that of diesel, which is far higher. The company also said it would like to see a cap on the federal tax for new natural gas trucks, adding that any incentives should be directed to vehicles.
Blu's retreat is coming to light months after Clean Energy Fuels Inc, the market leader in natural gas fueling and backed by Texas billionaire T. Boone Pickens, said it had slowed development of LNG stations due to truck availability.
There are many reasons to believe in the market for natural gas trucks. Companies like shipper United Parcel Service Inc and consumer products giant Procter & Gamble are amassing fleets of them during a boom in U.S. shale gas production that has kept prices on the domestic fuel low.
Blu, formed in 2012 as a joint venture between ENN and a small Utah company called CH4 Energy Corp, has built about 25 permanent stations where trucks powered by LNG can refuel - about half the number it pledged to build in 2013, it said.
The company, whose legal name is Transfuels LLC, also appears to have tempered its longer-term expectations. Originally, it hoped to spend more than $1 billion to build 500 natural gas fueling stations within three years, according to sources with knowledge of the company's plans at that time.
This week Norton predicted the company will have "in the low hundreds" of both permanent and so-called terminal stations by 2017. Terminal stations are semi-portable, and Blu is in the process of delivering 15 to 18 of them to customers so they can refuel their fleets themselves.
But ENN, which has a majority stake in Blu and controls its board of directors, last year grew increasingly impatient with the slow pace of the market's development, according to sources close to the company who said expectations were too high at the home office in China. That led to the ouster over the last three months of not only key executives in charge of finance, sales and marketing, and business development, but also its Chinese chairman, Jun Yang.
Norton would not comment on the dismissal of people from specific positions, but said "there were some changes that our board wanted to make around how we were going to market."
The company has identified a new chairman but would not say who it is until the person's required working documents are in order. The other vacant management positions are being filled, Norton said.
ENGINES SLOW TO REV UP
Station development has slowed down, Norton said, in part because of issues rolling out natural gas engines for trucks.
At the end of last year engine maker Westport Innovations Inc pulled the plug on a 15-liter natural gas engine that Norton said was the best option for trucks hauling heavy loads across mountainous terrain in the Western United States. To make matters worse, Cummins Inc this month put plans for its own 15-liter natural gas engine on ice indefinitely, saying "the timing of the adoption of natural gas in long haul fleets preferring a 15-liter engine is uncertain."
An eagerly anticipated 12-liter engine by Cummins and Westport's joint venture hit the market last year after some delay, but it is better suited to haul somewhat smaller loads on flatter terrain. As a result, Blu is refocusing on the Midwest and Southeast markets, Norton said, and was therefore forced to slash 20 percent of its staff. The Salt Lake City-based company still has 170 employees.
In addition, Westport spokeswoman Nicole Adams said most of the 12-liter engines that have been ordered so far are configured for compressed natural gas (CNG) as opposed to LNG, the fuel Blu and rivals Clean Energy Fuels and Royal Dutch Shell Plc are banking will eventually be the fuel of choice for heavy-duty trucks running on natural gas. LNG trucks are faster to refuel, can go farther on one fillup, and have lighter storage tanks than CNG trucks.
Clean Energy has built 80 public LNG fueling stations along U.S. highways, and it too, has slowed down development to account for a delay of about a year in its expectations for natural gas truck availability. Only about 22 of those stations are open for business, though the company opens a new one about once every 10 to 14 days as fleets of LNG trucks are delivered, spokesman Gary Foster said. Shell plans to open its first LNG fueling station this year and is planning about 100 such stations over multiple years, according to a spokeswoman.
The big issue long term, however, is cost, Norton said. A natural gas truck can run between $40,000 and $80,000 more than an equivalent diesel vehicle.
"Customers are saying the trucks need to cost less for them to really purchase large numbers of trucks," Norton said. Within three years he expects an LNG truck to cost the same as a diesel truck. With equivalent truck costs and lower prices for natural gas, Norton said, "it's pretty hard for diesel to compete." (Additional reporting by Terry Wade in Houston; Editing by Grant McCool)
* King Salman arrives in Kuala Lumpur for start of rare Asian tour
GENEVA, Feb 25 The Syrian opposition delegation attending peace talks in Geneva condemned an attack by suicide bombers that killed security forces in Homs on Saturday, while suggesting that only people with security clearances could get close to the area.
Feb 25 U.S. President Donald Trump's administration will begin rolling back Obama-era environmental regulations in an "aggressive way" as soon as next week, the head of the Environmental Protection Agency said on Saturday - adding he understood why some Americans want to see his agency eliminated completely.