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LA CROSSE, Wis. -- Sales at Kwik Trip Inc.'s nine natural gas fueling locations are exceeding expectations, Chad Hollett, director of warehousing and distribution for the Wisconsin-based convenience store chain, told CSNews Online.
Kwik Trip has been so happy with its initial foray into natural gas fueling stations -- located in Minnesota, Wisconsin and Iowa -- that the chain will begin construction on 12 more later this month and in early March, Hollett reported. These new fueling locations are set to open in the late spring or early summer.
"We'll continue to put stations in as we see market demand for [natural gas]," he said. "The ownership of the company [the Zietlow family] has a great vision to create an infrastructure that hasn't really been seen before."
The current Kwik Trip natural gas stations, which opened in 2012, have exhibited excellent growth and strong gallon sales to date, Hollett added.
Replicating the customer experience across all its locations is Kwik Trip's primary focus. "We want to make sure customers receive the same service as they would when purchasing gas or diesel," he explained. "That approach is paying dividends right now. All in all, the customer experience has been outstanding.”
There are two demographics of consumers purchasing natural gas at Kwik Trip sites. One group is fleets, or what Kwik Trip refers to as heavy-duty vehicles. The other group is individual consumers who own passenger vehicles, vans or pick-up trucks, which Kwik Trip refers to as light-duty vehicles.
Heavy-duty natural gas vehicles are produced in abundance by original equipment manufacturers and are a constant repeat customer for Kwik Trip’s natural gas stations. Light-duty vehicle availability is more erratic. However, Hollett noted that customers can walk into a General Motors auto dealership today and place an order for a bi-fuel compressed natural gas (CNG) vehicle.
Some consumers have already placed such orders. Light-duty vehicle fill-ups have grown significantly at Kwik Trip’s natural gas fueling stations since they opened. "We're starting to see light-duty sales gain some real traction," reported Hollett. "And that's true not just within specific markets, but the entire area [in which we have natural gas stations]. We are pleasantly surprised with the gains in the light-duty area."
CNG and liquefied natural gas (LNG) are touted as offering many benefits compared to traditional petroleum. Natural gas is locally produced, will be abundantly available for upward of 100 years, and is purported to be more environmentally friendly and provide a stronger margin for retailers than its counterpart. Also, natural gas is cheaper than petroleum. Although the pricing difference changes on a daily basis, natural gas is much cheaper than petroleum at the pump, Hollett confirmed.
"Our retail price for CNG is running from $1.59 to $1.89 [per gallon as of mid-February]," he said. "So, there is a solid $2 [savings] in most cases."
Natural gas also has an important advantage compared to another alternative fuel, ethanol. Misfuelings and subsequent lawsuits stemming from those actions are less likely with natural gas vs. ethanol, Hollett told CSNews Online.