General Electric Co (GE.N) reached a deal to sell equipment to Clean Energy Fuels Corp (CLNE.O), which is building out a series of liquefied natural gas fueling stations for U.S. truckers.
The largest U.S. conglomerate sees liquefied natural gas equipment as becoming a $1 billion market over the next five years, said Mike Hosford, general manager of unconventional resources for GE Oil & Gas.
Clean Energy, which counts T. Boone Pickens as its largest investor, agreed to buy two GE-made MicroLNG plants to provide liquefied natural gas for a network of 70 natural gas fueling stations it is opening at truck stops along U.S. interstate highways this year, the company said in a statement released on Tuesday.
"We currently have some LNG production facilities, but the country is going to need more," said Andrew Littlefair, Chief Executive of Clean Energy, in a statement released on Tuesday. "These two plants are critical in our next phase (of expansion) and we are going to need more plants over time."
By the end of 2012, Clean Energy aims to have in place natural-gas filing stations at existing truck stops on major highways across the United States, at intervals of roughly 250 miles apart.
Next year it aims to boost its count to 150 filling stations, Littlefair said.
U.S. natural gas production has grown rapidly in recent years as advances in hydraulic fracturing technology have opened up new supplies of the fuel. Surging production has driven down prices, making it a more appealing fuel for everything from power plants to truck engines made by companies including Cummins Inc (CMI.N).
Trucks using liquefied natural gas can save about 25 percent on their fuel costs, Clean Energy estimated, though the engines add to the cost of the truck.
Having its own conversion plants, which can take natural gas from pipelines and chill it into the liquefied form used in trucks will be critical to meeting demand, said GE's Hosford. He noted that today much liquefied natural gas, or LNG, is produced by electric power stations at off-peak times.
"As soon as a cold day comes around, the utility is obligated to supply that gas to generate power for its customers," Hosford said. "There is not enough LNG capacity in the United States."
Texas oilman Pickens owns 20.8 percent of Clean Energy, according to Reuters data. (Reporting By Scott Malone; editing by Andrew Hay)