Direct Energy Business
Market Data For Your Home Contact Us

6 Things to Look For in a Compressed Natural Gas (CNG) Supplier

read | Share:

This is a guest blog by Matt Smith, executive vice president of sales and marketing for Xpress Natural Gas (XNG). XNG is the leading provider of customized natural gas solutions to industrial and commercial businesses in the U.S. Northeast and Canadian Maritimes. They are focused on providing natural gas to businesses and institutions that do not have access to pipeline gas. Their company has invested nearly $50 million in equipment and service capabilities since 2011 to build the most comprehensive compressed natural gas (CNG) service network in the Northeast U.S. 

With the recent partnership between XNG, and Direct Energy Business to bring natural gas to off-pipeline businesses and municipalities in New York, I wanted to take a moment to share 6 things to look for in a CNG supplier. 

1. Firm service = no supply restrictions

  • CNG suppliers should be located directly on main transmission pipelines and not on a low-pressure local distribution company (gas utility) pipeline.
  • On the main transmission line, suppliers can buy wholesale gas and guarantee delivery of your nominated volumes.
  • Furthermore, the main transmission lines are not to be subject to seasonal curtailment like LDC systems, so there are no pressure or seasonal volume restrictions on your supply of gas. 

2. Sufficient scale in infrastructure and resources

  • Suppliers should have more than two truck-loading stations operating and at least 30 to 40 trailers in the market to ensure more than 99 percent reliability of service.
  • Northeast suppliers should be able to offer service from indoor facilities, not outdoor stations that can be impacted by the weather.
  • It’s important to confirm with any supplier that all compression systems are designed for N+1 reliability to help ensure consistent availability of supply for your operations.
  • Ask how long it takes to fill and dispatch a trailer – if it averages more than 45 minutes, chances are your company will find itself waiting for gas deliveries. 

3. Sufficient fuel storage on site

  • More is always better. At XNG, we use the highest-capacity CNG trailers certified for both U.S. and Canadian operation.

4. Performance guarantees

  • We have demonstrated and proven reliability in servicing high demand operations. Since inception, XNG has achieved more than 99.5 percent performance even during force majeure events.
  • If we fail to deliver, we reimburse the customer for the difference in price between natural gas and their back-up fuel for every gallon they burn. 

5. Price transparency

  • Suppliers should competitively bid your annual gas volume to all parties with capacity on their pipeline and provide that pricing directly to you with no mark-up. The supplier should also be able to offer fixed commodity pricing. 

6. Commodity pricing matters as much as delivery charges

  • Most importantly, the supplier should identify the index price and all mark-ups on the commodity gas (not just their delivery charge).
  • Suppliers located on local pipelines have structurally higher gas costs, and will pass along more dollars on every commodity unit, which can quickly trump a few dimes in service cost savings.
  • By partnering together, Xpress Natural Gas and Direct Energy combine proven technology and the most comprehensive network of supply terminals in the Northeast, with the largest and most sophisticated gas procurement capabilities for business.

Posted: February 21, 2014