Diesel Gas - Gracefield

DieselGas is a specialist alternative fuels engineering company established in the early 1980’s to take advantage of high oil prices after the second oil shock and now has a 30 year history of designing and implementing proprietary natural gas dual-fuel conversion systems for diesel engines. DieselGas is based in New Zealand and has successfully converted over 20 production diesel engine types with its technology, satisfying customers in 13 countries including OEM’s like Caterpillar and Robert Bosch. Because of low oil prices since 1986 the demand for DieselGas products stagnated over the years with economics and political conditions dictating the difference between the local prices of diesel (subsidized in most developing countries) and natural gas (price parity with diesel in the US from 1986 until 2009). The fact that natural gas is a more environmentally friendly fuel than diesel, with DieselGas dual-fuel systems offering greater than 20% reduction in CO2, has not been sufficient reason for widespread adoption of the DieselGas system.

The Product

The DieselGas product is a unique engine management system which involves specially designed and engineered mechanical and electronic components fitted to a production diesel engine which allows most of the power to come from natural gas introduced into the engine in a “dual-fuel” configuration with ignition coming from a small percentage of diesel. This conversion results in up to 80% of the diesel being replaced with virtually no change in performance. The DieselGas product is configured with a sophisticated ECU (electronic control unit) and M2M (machine to machine) software to enable responsive real time engine management which can be remotely monitored. DieselGas works closely with the engine manufacturer in the design and calibration process to ensure that all OEM performance parameters are consistently observed. The company has achieved ISO 9001:2000 certification and has achieved certified supplier status with such manufacturers as Robert Bosch and Caterpillar, and it has met EPA and Euro emissions standards in every country where these have been a requirement. DieselGas’s dual-fuel technology works equally well with CNG or LNG. The DieselGas dual-fuel system diesel substitution performance is 50% higher than aftermarket systems currently available in the USA.

US Opportunity

The recent surge in natural gas production in the US, due to the adoption of fracking techniques to unlock the country’s vast shale gas fields, has led to a glut of natural gas. The result is, after 25 years of price parity, a wide divergence in price between diesel and natural gas; a differential that is expected to continue for many years. At the same time, political instability within OPEC, the accelerating effects of climate change and oil price rises has increased the political will to substitute imported oil with domestic clean burning natural gas. Subsidies on diesel and price controls on natural gas means the value proposition for each country must be assessed individually.

US Value Proposition

In 2013 the price differential in the US between diesel and natural gas was $4.00/gallon diesel to $2.00/DGE (diesel gallon equivalent) for compressed natural gas. Although the cost of a DieselGas engine conversion system to a fleet owner is US$15,000 the full installed price of the truck conversion including tanks, fittings and labour is about US$35,000. The price advantage of natural gas will give heavy duty high to medium mileage US fleet operators a payback between 10 to 18 months respectively. The logic of the DieselGas value proposition is compelling – economically, environmentally, and politically.