NORMAN — Public sales at Norman’s city-owned CNG facility have exceeded expectations by more than double during its first year of operation.
“Since opening, we have dispensed 72,000 gallons of fuel,” Norman Public Works Director Shawn O’Leary said. “The city used 30,000, and the general public consumed 42,000.”
Those public sales generated $110,000 in revenue.
“That’s new revenue. That’s what’s key to us. This was an amazing opportunity,” O’Leary said. “We opened in January 2012. We literally doubled our projection of sales.”
Located at 2351 Goddard Ave. on the Flood Street/State Highway 77 corridor, the facility is convenient for many motorists, but the price is worth driving out of the way to fuel up.
“Our price today is $1.36 per gallon and has probably been that way for a couple of months,” O’Leary said. “When there’s a shifting of prices, we try to shift with them. We tend to be on the lower-to-middle end of the range. Our cost isn’t as high as some of the vendors. Rarely are we on the bottom end, and rarely are we on the top end.”
Policy dictated by the Norman City Council allows the city manager to set the fuel prices based on the regional market.
Currently, prices are ranging from $1.19 to $2 per gallon. Checking CNG prices isn’t difficult these days. There’s even an app for iPhone that gives prices and locations of stations, O’Leary said.
“This is an open, public facility open 24-7,” O’Leary said. “People have been very happy with it. I think our price is as competitive as any in the immediate vicinity of Norman.”
Prior to the opening, city staff looked at area sales and projected what the city could expect to generate in public sales.
“You can argue that our projection was low,” O’Leary said. “At the end of the year, we had sold twice as much fuel to the general public as we projected, so that’s good news. It’s not even putting a dent in our capacity. We have great capacity.”
City staff projections for the city fleet were right on target. Growth has come from outside the city through private sales to individuals with CNG vehicles as well as to commercial fleets.
“The message there is we’re seeing a growth in the CNG fleet out there,” O’Leary said.
The city owns 35 CNG vehicles and continues to add those vehicles whenever it can, but staff measures the costs versus benefits in each case. On Tuesday night, the Norman City Council members approved the purchase of a CNG trash truck to replace a damaged truck.
“Trash trucks are a fast payback on the additional cost for the CNG,” O’Leary said. “Every vehicle that is CNG costs more. That difference is coming down. We’re seeing a gradual decrease, but they’re still higher than conventional vehicles.”
The city must justify the additional cost of purchasing CNG vehicles and look at the long-term payoff.
“Trash trucks get about three miles to the gallon,” O’Leary said. “You can do the math pretty quickly there. A trash truck with our kind of mileage and our kind of price will pay for itself in two to three years, and we get seven to 10 years out of an average trash truck. It doesn’t take long to figure out that’s a sound investment.”
But money saved isn’t the only advantage. Vehicles fueled by CNG have less polluting emissions and create much less noise than diesel vehicles. O’Leary said the city has had a “very positive maintenance experience” with CNG vehicles.
“The CNG is such a clean-running fuel, we’re finding we can extend oil changes by several thousand miles,” O’Leary said. “There’s noise reduction of about 90 percent from a diesel vehicle to a CNG.”
That $1.36 charged to the public is higher than the city cost for fuel, in part because the city doesn’t have to pay state and federal fuel taxes on their product.
“We’re running our vehicles at a much, much cheaper rate,” O’Leary said. “We expect over $1 million in savings in the city’s overall fuel budget in about three-and-a-half to four years,”
O’Leary estimates that the fueling facility will have paid for itself within a couple of years.
“In round numbers, the cost of this system was about $2 million,” he said. “We were successful in obtaining about $1.5 million in grant funds from the U.S. Department of Energy. That was part of that stimulus package administered by the Oklahoma Department of Commerce. The city was able to build this facility for about $500,000.”
O’Leary said the facility has high capacity and will be able to serve the increasing demand for CNG fuel.
“We’re very fortunate that we can continue to grow this station,” O’Leary said.
The machinery has been very reliable so far but will require maintenance. The city has not hired additional staff to operate the facility yet.
“To our fleet operations’ credit, we are literally doing this with existing staff,” O’Leary said.
Staff received training to do daily maintenance. Out of 12 auto technicians, eight or nine are now CNG certified, O’Leary said. The city is investigating an outside maintenance program to have an outside contractor come in and do the maintenance on an annual-fee basis in the future.
Norman intends to implement a “proactive maintenance program,” he said.
“We knew that going in,” O’Leary said. “We’re at that point now — we’re a pretty big operation.”
In Oklahoma, the legislature passed a nickel-a-gallon tax on CNG, which O’Leary said is “pretty equivalent to unleaded,” so those sales still help maintain roads and bridges across the state just as the fuel taxes on gasoline and diesel do.
“We pay state and federal on public sales,” O’Leary said. “I’m very proud of our team, Mike White and his staff. We did this entire thing in-house.”