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According to the Associated Press, The Department of Environmental Conservation has drafted regulations that will allow the buildout of LNG truck-fueling stations and other types of LNG storage plants. The agency expects the plans to be finalized by early next year and estimates about 21 fueling stations will be built over the next five years.

LNG has become an increasingly popular alternative for diesel fuel. The New York State Motor Truck Association (a state that has mired the advancement of natural gas fracing within its boundaries) says major fleet operators that have switched to LNG are saving $1 to $3 per diesel equivalent gallon, depending on source and supply. UPS is buying into the change and invested $50 million on October 8, 2013, for LNG-fueled trucks. The company said it has about 2,700 alternative fuel vehicles in its workforce, including electric, hybrid electric and liquid propane gas vehicles. According to UPS’ fact sheet, LNG’s prices are 30% to 40% lower than imported petroleum and carry 25% less CO2 emissions.

Other truck-reliant businesses, such as FedEx and Lowe’s, are exploring the possibility of LNG vehicles. Kenworth and Mack Trucks have both developed such vehicles, and General Electric and Caterpillar have extended the blue flame’s reach into the locomotive industry.

The rise of LNG demand for fleet vehicles in recent years can be attributed to the additional construction of fueling stations. Royal Dutch Shell (ticker: RDS-B) has announced plans to build up to 100 LNG stations along interstate highways. Clean Energy Fuels (ticker: CLNE) completed 70 stations in 2012 and expects to complete 30 to 50 more in 2013. Two are anticipated to be built in western New York, with one in Rotterdam and the other in Pembroke.

According to the U.S. Department of Energy, there are now 81 LNG fueling stations in 14 states, with more than half of them in California and the rest primarily west of the Mississippi.

New York Reaping Benefits of Nearby Marcellus Development Amidst Fracing Ban

Shale gas development in New York has been banned since it was placed under environmental review in 2008. Fracing is currently banned in 50 different towns in the state, and environmental groups are crying foul over the proposed construction.

However, the transportation of LNG from three different storage plants has occurred since the 1960s, and the exploitation of the Marcellus Shale in Pennsylvania has revolutionized New York’s energy makeup. Increased buildout via pipelines will add 2.0 Bcf/d of capacity to the northeast markets upon their completion in early 2014, with the number expected to reach 3.5 Bcf/d by 2015.

The Marcellus shale, which underlies southwestern New York, is estimated to hold at least 141 trillion cubic feet in technically recoverable natural gas. According to the EIA, New York had the fourth highest average electricity prices in the country in 2011. It produced power predominantly through nuclear and renewable means in 2011, even though its natural gas consumption more than doubled the consumption of its two main power generators.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.