As Commodity Prices Face Pressure and Oil Stays High, Will Farmers Embrace Natural Gas?

2012 promises to be a difficult year for farmers as an estimated 4.8% increase in U.S. corn production, coupled with increased planting of the crop worldwide, puts downward pressure on prices. Corn, which has doubled in the past two years due to demand for cattle feed, is expected to drop by 30% to $4.035/bushel next year in Chicago trading. The record U.S. wheat harvest which is also projected next year should depress wheat prices as well, according to a Bloomberg article.

But oil prices are expected to remain high.  Barclay’s senior economist Alia Moubayed said that the Saudis need $91 oil as a “break even point” in an interview on Bloomberg’s “Surveillance” yesterday. Social unrest swept the Middle East in 2011, and the Saudi government has attempted to quell dissent by promising increased social benefits. The Saudis need higher oil prices to keep those promises. Saudi Arabia’s massive production capacity means that they are a longtime swing producer who can influence the world oil price by simply increasing or decreasing production. U.S. oil producers also need $80 oil to stay profitable. Below $80 they begin slowing drilling and decreasing production.

This combination of higher input costs and lower grain prices, coupled with the recent price boom in farmland, promises to squeeze profits for farmers in 2012. This has many farmers looking for ways to cut costs.

Natural gas may be part of the answer. “Though there are costs to converting diesel powered machinery to run on a diesel/natural gas blend, a 20-30% savings in diesel fuel promises a quick return on investment for high volume diesel users.” said C&E Clean Energy Solution’s Brian Carpenter. Continue reading

Making a Stationary Diesel Run on Natural Gas

The company that sells the conversion kit for the Powerstroke conversion project, C&E Clean Energy Solutions, also sells kits for stationary diesels to enable them to run off pipeline gas.  Here is a Davey 3600 psi air compressor which is powered by a 17 h.p. Hatz air cooled diesel engine. The engine is fitted with a small version of our stationary diesel natural gas conversion kit.

When the video starts, you can hear the engine and compressor running in the background. Both units are on and the engine is under pretty close to its max load for this particular application. The compressor might demand a little more from the engine as it gets closer to that 3600 psi number, but this is about as hard as it ever works right here. When the video starts, the unit is already running on a mixture of natural gas and diesel fuel.

I then show the digital pyrometer and the master switch for the natural gas kit. When I shut the switch off, you hear the motor do two things: slow down, and get noisier. It’s doing that because it’s going back to running on straight diesel fuel and the injectors are starting to deliver more diesel fuel as the governor compensates for the lost natural gas fuel.

Because I’m using this unit as a demonstration platform and I need it to be mobile and have a mobile fuel supply. So I had to find a way to run it off of compressed natural gas. Because it’s air-cooled and naturally aspirated, our CNG unit wouldn’t work. So I had to cobble a system to make it run off compressed gas taken from the tank in my truck. I put a 300 psi rated valve and air fittings off the low pressure side of the 3600 psi-250 psi hot-water-heated regulator on my truck’s conversion kit. The gas then passes through an air compressor pressure regulator where I bump it down a bit more. Then it passes through an oil-resistant air hose, and is patched into a two stage RV propane regulator. That steps it down from 250 to 1/2 psi.

There are two difficulties in making that work. One is just the volume of gas I’m able to move through those small orifices, even though it’s under quite a bit of pressure. The other problem is that I have moisture in my gas and I get icing from the rapid drop in temperature. That’s happened to me a time or two and has made a couple of messes. I found that dialing back the pressure gives me more run time before the icing starts. As a result of that, I’m not able to substitute as much gas as the engine will actually take. I estimate I’m running on 30-40% fuel substitution right now. That’s enough to make a noticeable difference when the gas is turned on, but it’s not my maximum possible fuel substitution by any means.

When I’m running it on a 3/4″ gas line at 1/2 PSI, I estimate I’m able to run 65% or 70% gaseous fuel substitution.

While the CNG kit for pickups and tractors, etc, requires a turbocharged engine to work, the stationary kit will work on both turbo and naturally aspirated engines. It will work on generators, irrigators, well pumps, feed grinders, saw mills, just about anything that you use a stationary diesel for.

The main point of this demonstration is this: Depending on the price of your natural gas and diesel fuel, you can save a lot of money on diesel fuel, or you can save a whole lot of money on diesel fuel. Even at 50% substitution (the low end of what is possible) you are substituting a fuel that costs around $1 per gallon, (or less) for one that costs around $3-$3.60 per gallon.

If you burn 6 gallons an hour of straight diesel fuel, and your diesel fuel costs $3.20 per gallon, you’re spending $19.20 per operating hour.

If you substitute 50% of the fuel with natural gas, you’re spending $9.60 per hour on diesel and $3 per hour on natural gas, cutting your cost per hour of operation to $12.60. That’s a savings of almost $7 an hour.

As I said before, 50% substitution is generally the minimum benchmark. If you’re running your diesel under 90-95% load, you’re not going to be able to substitute 50%. Maybe more like 30-40% substitution in that case, but most guys don’t run their engines that hard.

If you’re running a lighter load, then you can get 75% substitution. On that same 6 gallon per hour motor, you’d be burning 1.5 gallons of diesel per hour. At $3.20 per gallon, that’s $4.80 worth of diesel fuel and $4.50 worth of natural gas, giving you a $9.30 per hour operating cost.

That’s a savings of  almost $10 per operating hour. The unit that substitutes 3 gallons per hour costs $1540 if you buy the pyrometer with the overtemp protection. That price includes shipping.

At $10 per hour savings, that unit will pay for itself in fuel savings in 154 operating hours. If you irrigate 800 hours per season, you get to start putting $10 per hour in your pocket less than 1/4 of the way through the irrigation season.

It’s a pretty simple equation. Spend less money on fuel. Make more profit on your crop.