Clean Energy Fuels Corp

Clean Energy Fuels Corp (CLNE.NASDAQ)

The final corporate average fuel economy (CAFE) rules for 2017 to 2025 have been released and the big winners may be companies like Clean energy fuels. Car and truck makers will have to reach average fuel economy of 54.5 miles per gallon by 2025, a mark that the industry expects will add $1,800 to the cost of each vehicle.

Natural-gas fueling has focused on the trucking market, where dollars and cents are all that matters. If natural-gas fuel wasn't cheaper than diesel, it wouldn't fly. But, Clean Energy Fuels work with their partners to expand natural-gas fuel usage,offering a cost competitive product. This is why natural gas gets the advantage for vehicle adoption. It's an easier transition to make for owners, and the cost savings are easier to identify.

Clean Energy Fuels Corp., was incorporated in April 2001 and is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company designs, builds, operates and maintains fueling stations and supplies its customers with CNG fuel for light, medium and heavy-duty vehicles and LNG fuel for medium and heavy-duty vehicles. The Company also sells non-lubricated natural gas compressors and related equipment used in CNG stations and LNG stations, converts light and medium duty vehicles to run on natural gas, and produces renewable natural gas (RNG), which can be used as vehicle fuel or sold for power generation.

Clean natural gas (CNG) is produced from natural gas that is supplied by local utilities to CNG vehicle fueling stations, where it is compressed and dispensed into vehicles in gaseous form. It also provides CNG by delivering and vaporizing LNG to turn liquefied natural gas into compressed natural gas (LCNG), at locations where no gas pipeline service exists or gas pipeline pressures are inadequate. It serves fleet vehicle operators in a variety of markets, including trucking, airports, taxis, refuse hauling and public transit.

At December 31, 2011, Clean Energy Fuels Corp served approximately 530 fleet customers operating approximately 25,000 natural gas vehicles, and it owned, operated or supplied 273 natural gas fueling stations in twenty-three states, in British Columbia and Ontario within Canada, as well as in Peru.

The Company is building a nationwide network of LNG truck fueling stations, which it refer to as America's Natural Gas Highway (ANGH), on the interstate highway system and in metropolitan areas.It also sells RNG produced by its subsidiary Dallas Clean Energy LLC (DCE), sells natural gas vehicles produced by its subsidiary BAF Technologies, Inc. (BAF), and sells advanced natural gas fueling compressors and related equipment and maintenance services through its subsidiary Clean Energy Compression Corp, also known as I.M.W. Industries Ltd. (IMW). In addition, the Company helps its customers acquire and finance natural gas vehicles and obtain local, state and federal clean air rebates and incentives. During the year ended December 31, 2011, it procured 43% of its LNG from third-party producers, and the Company produced the remainder of the LNG at the Pickens Plant and the California LNG Plant.

The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. Management expects to complete 70 stations on its natural gas highway by the end of 2012. As more trucking and haulage companies convert to natural gas, Clean energy Fuels Corp is a good way to invest in the infastructure to support them. Over the longer term, this company should bring in a good capital gain for early investors.

So far the company progress is impressive:

CLEAN ENERGY FUELS CORP HAS:
• Delivered nearly 800 million gallons of CNG and LNG to customers
• Grown operations to fuel more than 25,000 vehicles daily
• Built over 150 fueling stations
• Installed and operated over 1,200 compressors worldwide
• Managed over 50,000 hp of compression equipment
• Built a field service force with more than 80 technicians nationwide
• Opened 20 inventory locations with over $3 million in spare parts stocked
• Developed two 24/7/365 Operation and Monitoring Centers connected nationwide
• Opened two LNG production plants and developed supply contracts with others nationwide
• Purchased approximately 60 LNG tankers making nearly 5,000 deliveries per year
• Built and operated one landfill-to-gas plant providing renewable natural gas or biomethane to the grid and to vehicles and is building a second biomethane plant

Acknowledging the growing potential of biomethane as a renewable, low-emission fuel for fleet vehicles, Clean Energy formed a subsidiary, Clean Energy Renewable Fuels (CERF), to develop and produce biomethane energy resources from landfills and other organic waste facilities. While natural gas is 23% cleaner in carbon emissions than diesel in heavy-duty vehicles, biomethane enables an 88% reduction in carbon emissions when displacing diesel or gasoline. CERF owns and operates a landfill gas processing facility in Dallas, Texas that produces renewable biomethane that is currently delivered into the nation's gas pipeline network and replaces conventional natural gas.
    
The McCommas Bluff landfill — the third largest landfill gas operation in the United States, opened in 1975 and is scheduled to close in 2042. It is estimated that pipeline quality biomethane gas will continue to be produced for approximately 30 years after the landfill closes. The plant is currently capable of processing 9.4 million cubic feet a day of landfill gas into approximately 36,000 gasoline gallon equivalents of pipeline quality biomethane. Dallas Clean Energy plans to increase this capacity to approximately 14.9 million cubic feet a day and make further improvements that should enable the production of approximately 60,000 gasoline gallon equivalents a day of pipeline quality biomethane. Of particular interest to Clean Energy's fleet customers is the landfill gas processing plant's potential for expansion. Expansion of the plant's production capacity will support additional gas sales, including the use of renewable biomethane as a vehicle fuel. Clean Energy has the ability to transport biomethane from its McCommas Bluff operations or other biomethane production sites to its national network of CNG and LNG fueling stations for use as a vehicle fuel.

In 2011, CERF began development of a project to process and sell renewable natural gas recovered from the Sauk Trail Hills Landfill site in Canton, Michigan. Clean Energy is building a high-BTU landfill gas processing plant, which will produce renewable natural gas for injection into the natural gas pipeline system. The renewable natural gas will be distributed for vehicle fuel use to natural gas fleets, Clean Energy customers and direct use by renewable power customers. When the landfill-gas-to-energy processing facility is fully operational, output of clean, green bio-methane is expected to equate to 6 million diesel gasoline gallon equivalents annually. Production is expected to begin by the end of 2012.

Clean Energy Renewable Fuels is actively pursuing additional opportunities to develop biomethane production sites and acquire biomethane for sale as a vehicle fuel to its customers.

Currently the stock price is around $13.52. It is well off its 52 week high of $24.75 As with most other renewable energy or Cleantech stocks, this is a high risk proposition and will be subject to a lot of volatility in its stock price. But, this company is going places and over the longer term, it should produce good capital gains.

Buy Clean Energy Fuels Corp (CLNE:NASDAQ)