Trailblazing Innovation for Fuel Diversification
A conversation with Andrew Littlefair, President and CEO of Clean Energy Fuels, a T. Boone Pickens company
founded Clean Energy Fuels with T. Boone Pickens eleven years ago. Since then, the company has been at the forefront of innovation in bringing Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) to large truck fleets.
This has required close coordination and cooperation with trucking companies, industry associations, government agencies, truck manufacturers, and vendors. What comes across in a conversation with Littlefair is that this is a company dedicated to forward thinking and innovation. In this interview, Littlefair sheds light on the innovations that led to Clean Energy Fuels, Inc.'s success so far, and those that will be necessary for continued future success.
Jo Grogan (JG)
: With your focus on clean fuels, innovation, and sustainability, is what's happening with the global economic climate affecting your progress?
: No, you know, of course, when you have a world-wide economic slowdown it makes people take stock of what they're doing and it tends to affect people's capital spending and people pulling their horns a little bit sometimes to be good managers of their budgets.
But, with the expensive oil earlier this year, we did see significant companies and industries for the first time understand that energy is going to be a more expensive commodity going forward. For many years, certainly in America, it was this kind of thing that, "Well, price goes up but then it always comes back down. We go find more oil."
I think people are beginning to understand it's less crisis. The whole world is using this oil and oil's finite, and the world's struggling. I think Boone (T. Boone Pickens) has done a very good job educating people to make them understand. The world is finding and is doing a pretty good job producing 85 million barrels of oil a day, but earlier this year we were using 86.4.
I think the light bulb went off with many industries, certainly many transportation companies to understand that fuel for transportation was likely to be expensive in the future. Now, we've had a reprieve, good for everybody. We've had a basic reprieve in terms of the price of oil, and of course, that's affected the price of diesel and gasoline.
But we do hear a lot of people now because we focus on a lot of fleet people, right, that have vehicles, talking about fuel diversity. And maybe they really should be looking at powering their vehicles on other technologies.
Now. To the first of your question, well, does the economic slowdown affect that? Well, sure it does. But, we still are—that is a new thing that people are looking at that I think has some real legs.
: What do you believe is the importance of innovation in this current climate?
: Obviously, to get people to use different fuel. That's a big innovation, and that's a big change. So, we've been using oil to make gasoline and diesel for the better part of 100 years. If you're going to get people to move to a different fuel to power their vehicles, you're going to have make sure—there's going to have to be some technology and innovation in order to make those vehicles work correctly and seamlessly to get people to change.
Let's face it, a diesel truck works pretty well. It happens to be dirty a little bit and it happens to be imported oil which isn't good, but it works well. So to get people to switch you had better deploy innovation and technology in the fueling and in the fuel and in the engine technology that makes those vehicles robust and work well.
So, there's a lot of technology development to have new systems that allow fuel to be reliable and profitable and reduce the cost of one's operations. That's how I sort of see the innovation going to the technology and then flowing through.
: As far as Clean Energy Fuels is concerned, what are you doing in the area of innovation to help create that environment?
: Well, what we've done is focus on the main part of our business which is natural gas fuel delivery. So, we built this year, a couple of weeks ago, the largest LNG (liquefied natural gas) plant in California, the first to be able to deliver liquefied natural gas to a new brand of trucks, new kind of LNG trucks that will be begin operating in the southwest in the United States.
So, we built this large plant which was the first one and we're building other stations. We've had to do some design and technology advancement work to make sure that those stations are able to satisfy our customers.
Because you're delivering a different kind of fuel that's new to people, so you have to do training and you have to do—we've had to develop new fuel delivery systems in order for that to be seamless to the customer.
: So, I assume you reach out into the associations and industry groups for the trucking companies and for fleets?
: We do. Basically our job is to work with customers, fleet customers. We are not trying to fuel every vehicle. I'm not as interested in your car as I am interested in Wal-Mart trucks or in UPS vehicles.
So we work very closely with fleets. And yes, we work with the California Trucking Association and the American Trucking Association and the engine manufacturers and the large scale truck manufacturers and their associated associations.
: Are the large-scale truck manufacturers interested in this topic?
: They are. They are. Now, we saw this year, Kenworth, PeterBilt, Auto Car, International, Sterling, now Freightliner, have all introduced natural gas engines into their product line.
And that's different. A year ago, there was only one. Now there's five. And you're starting to see other engine manufacturers, too. Cummings, there's talk of Volvo, so you're starting to see it.
What's interesting is when you look around the world. About a year and a half ago there were 5 million natural gas vehicles in the world and today there's about 9 million. Because you're seeing this in other parts of the world actually grow more rapidly and expand faster than it is here.
: What is the most difficult problem you and your team worked on, and how did you solve it?
: I think, and this doesn't sound very creative, but I think that what our team did early on and continued to develop is, more fueling stations working in concert with fleets to cost-effectively build stations, delivering a savings to the customer but doing it as an anchor-tenant model.
While that seems pretty obvious, that wasn't the way it was always done. So we focused very carefully on high-fuel use fleets, worked with those fleets, built stations for those fleets which enabled then others to kind of come to the party, and that was different than the way it had been done before.
: Were there any surprises along the way?
: We began to develop a dispenser for the delivery of natural gas to the vehicles and then there was a law change that required training for everybody that would fuel up at a station, and this was kind of a curve ball that we had to deal with. What we did is we then satisfied that requirement by installing video screens at our dispensers so that we could offer the training to those people that maybe were the first time people to come to our stations.
: And how did you go about doing that? What kind of team did you assemble to address those issues?
: We have very good vendors and in that case we had vendors from the dispenser manufacturer and the data collection companies and the video companies. We have a good internal team. Usually we innovate internally. We often use brainstorming, I mean, just like anybody would, I guess, with our internal team, but we're not shy about bringing in our vendors to help us for these kinds of solutions.
: What's the most exciting innovation you or your team was involved in developing?
: The notion of going about the really developing the different kind of business model to expand our station development.
That anchor-tenant model, which then drove more stations to be built that then could be also accessible to the general public. And that was the most exciting thing that we've done.
But there are always things that come up for us that are exciting. Currently we're involved with the Vehicle Production Group that's building a ground—we're an investor in a group that's building the first ground-up natural gas vehicle built in the United States since about 1999. It'll come to market in 2010 and it's a ground-up vehicle that'll be built in Indiana in a little Hummer plant, if you will.
It'll have lots of innovation in it. It's going to be 88 compliant to be able to handle wheelchairs. So, picture with me, Jo. It's going to be a new, very clean, dedicated natural gas taxi cab that'll also be almost like a London taxi, yet it's going to be the first one of its kind to be built from the ground-up so it'll be very—it'll have a lot of interesting technology in it and innovation.
So, we're constantly working on things like that. It's pretty cool.
: You mentioned brainstorming. Are there any other ideation-thinking, problem-solving, creativity tools or software that you use or familiar with?
: We do brainstorming with our internal strategy group but we've also done some innovation to simplify, streamline the compressor. We use compressors to compress the gas that we then put in the vehicle. We have done a lot of work over time to reduce the cost and increase the technology, the performance of those compressors, working again with vendors. So I don't want to claim all the credit for that. But in that process we use simulation software.
: Have you had any training or do you use any types of theories for innovation, such as Six Sigma or Edward DeBono?
: I think that is really done. I'm not an engineering guy. But that's really done really more by our vendors. We do have an engineering group here. I'm sure some of these guys are trained in some of these methodologies and theories, but I wouldn't say that's something that we are steeped in here.
: I've looked at some of your and Mr. Pickens' discussions with people in the past. One thing that seems to come across is that, at its very nature, your company is innovative. It's a forward-thinking type of company.
: That's right.
: So, how would you describe the philosophy?
: Well, we really are trail blazers. Been around a while but when you think about it, you take a step back and you say, "Well, you're going to change the way people move their goods and services and the fuel that they use. So you're really on the leading edge of change."
So we have to—our sales team and our marketing executives and our engineers and all the different people we have working—we really are testing new ways to do things. We have to be very patient. We have to be very determined because you're really going up against industries with lots of inertia.
We have a relatively long sales cycle. For instance, we convinced a refuse hauler to go get natural gas trucks and then build them a station. That all takes time. It's not like going out and buying a cell phone. I would say that...and I'm sure everybody would say this but it's really dedication of our employees and persistence has had to be very important.
I mean, we now, Boone and I founded the company about eleven years ago. I don't know what we were looking at eleven years ago, you know? We knew we had a good fuel but we had to go about innovation to figure out how to sell it.
I would just say that from top to bottom we have a law here that we just have to stay focused and to stay committed and be persistent and stay optimistic, because you're having to incite change in people. That's not always easy.
A whole bunch of what we do is we like to think we're the "white hat guys" because we're bringing cleaner, domestic fuel that is lower on knocks and lower on particulate matter and cheaper for the customer and domestic America. So we like to think that we have a good fuel so we spend a lot of our time and effort working with air regulators, policy-makers, legislators to encourage them to adopt incentives or policies to promote cleaner fuels, because we know we have a clean one.
So a lot of that has to be done.
: You mentioned that you work with your vendors and with other folks to develop innovations. Are there any other sources that you use? Have you ever considered using collaborative online innovation communities such as IdeaConnection.com?
: I don't know that we really have. I understand it but I don't think we've done as much of that.
: What would be the barrier using these services, and how could it be overcome?
: Well, I don't know. I'm sure at some day we will do more of that. I know that from a sales side we use webinars which just five years ago no one did that. No, I know there will be the use of these other virtual communities and design. I'm sure all that's coming.
So, I would say that some of what we do is with more mature businesses whether or not they're all out there using these kinds of communities, virtual communities, I don't know. My guess is that they are probably slower to come to it but they'll…I mean, let's face it. That'll all happen eventually. But I can't speak to right now how it's used by us.
I think there's generally in our company and I'm sure it's true at most companies, there's an openness to try and adopt this stuff as it makes sense. The younger people we bring on-board are so much more…open to incorporate all of these different more advanced technologies and computer technologies and the things you mentioned. Every year everybody that you bring on-board that's a little younger and fresher; they're just much more advanced in this kind of thing.
So, I would say that our company's open to adopting a lot of it. But in some of the areas that we do a lot of our work I would say that you're working with older, more mature oil field type equipment that is a little less cutting edge, I would say. Even though its application eventually is cutting edge so the stuff we use isn't.
: What's next on the horizon for Clean Energy Fuels? What do you want to talk about now? What's the next big thing?
: Some of it will be in the future. People will look at more advanced technologies. There's been talk about natural gas as the pathway to hydrogen or fuel cells.
So, for instance, this year we worked with General Motors to open our first hydrogen fueling stations at one of our stations. That's new for us and that's a totally different delivery system and it's a different fuel that has different characteristics.
I would say that we'll learn a lot from that. That will be applied not only to natural gas but also to the fuel cells of hydrogen. That's out there a ways.
So that's new for us. But you'll see the technology and innovation play itself as how you use natural gas on-board for different vehicle platforms. For instance, Toyota, just the other day introduced at the L.A. Auto Show a natural gas hybrid. The first time that we've seen a natural gas paired with a hybrid technology. We're very excited about that. We don't know how that will all play out. But that's new. That's different.
We've also looked at as a company a home refueling and how we would be able to fuel people's cars right in their home and we've done work on that. And then so I would say it's looking at different adaptations of natural gas as the pathway to other advanced fuels. This could take quite a while and it can be pretty far out in the future, too.
: So, if I were to get a crystal ball and say, what is Andrew Littlefair
going to be talking about starting in January of 2009, what would it be?
: Well, it would be fuel diversity, and it'll be goods movement. I think there's a great opportunity for America and we'll be at the forefront of that is using natural gas in goods movement in this country. That is, in regional trucking and trucking. That's new. It doesn't sound that new but it's new and it's using liquefied natural gas or compressed natural gas in heavy-duty trucks, just starting.
But you can really make an impact on the environment and economic impact for your customers by introducing natural gas into those trucks. So that's one thing.
Then I'd say here in 2009 more and more talk about fuel diversity. You're going to be in I think a difficult economic environment where you're going to have probably cheaper oil for a minute. People will get used to this but I still think you'll see quite a bit of discussion and introduction of natural gas into heavy-duty trucking fleets, even given the fact that their business is pretty tough right about now.
When diesel went 5 bucks it scared the hell out of the trucking guys. They know a year and a half from now or so you're going to be back at that level. That's where you hear these big trucking fleets say, "Well, maybe we need to start looking at other things."
We do know that in more difficult economic times sometimes it's hard to get people to adopt new things when they're trying to just keep everything together, but the economy will rebound and then I'll think this fuel diversity thing will be a subject that a lot of people like your brother and engine manufacturers and others will look at.
: I certainly appreciate your time this morning. It's been very informative for me and I know our readers are going to enjoy learning more about what's happening in the clean fuel industry, and particularly, hearing from you.
: Well, thank you very much. I hope this was helpful.
: It was, many thanks!
is the President and Chief Executive Officer of Clean Energy, and serves on the Board of Directors of the Company. Clean Energy is the largest provider of vehicular natural gas (CNG and LNG) and related services in North America. It has a broad customer base in the refuse, transit, shuttle, taxi, police, intrastate and interstate trucking, airport and municipal fleet markets with tens of thousands of vehicles fueling at strategic locations in the United States and Canada.
Mr. Littlefair also serves as Chairman of NGV
America, based in Washington, DC. NGV
America is a national organization dedicated to the development of a growing, sustaintable and profitable market for vehicles powered by natural gas or hydrogen. It represents natural gas companies, equipment manufacturers and service providers, as well as environmental groups and government organizations interested in the promotion and use of natural gas and hydrogen as transportation fuels.
Recently, Mr. Littlefair and NGV
America were instrumental in gaining new federal legislation to encourage the growing use of alternative fuels for transportation in America. In 2004, Mr. Littlefair was named an NGV Champion by the International Association of Natural Gas Vehicles (IANGV), reflecting his contributions to the growing industry.
Previously, Mr. Littlefair served as President of Pickens Fuel Corp. (PFC), predecessor company of Clean Energy, which he founded in 1997 with Boone Pickens. Mr. Littlefair served as Vice President of Public Affairs at MESA Inc., one of America's largest independent producers of natural gas. His responsibilities included federal and state government affairs (Texas, Kansas, New Mexico, Louisiana), as well as serving as Director of Mesa Environmental. In addition, Mr. Littlefair served as Mr. Pickens' assistant for 10 years, coordinating special projects as well as being responsible for the company's natural gas vehicle activities.
Before joining MESA in 1987, Mr. Littlefair was staff assistant to the President in the Office of Presidential Advance. He traveled on behalf of President Reagan to 60 cities and seven foreign countries.
Mr. Littlefair graduated from the University of Southern California with a B.A. in Political Science. He was President of the Student Senate in 1981-82.
If you would like to comment on the above article, please feel free to contact Jo Grogan
. If you would like to suggest other innovation decision makers for me to interview, please just let me know.