Markets

Natural Gas Emissions Abatement Technology

In the North American natural gas industry, interstate pipelines, local distribution companies (LDCs) and utility-owned power generation facilities are directly regulated with respect to the rates they charge, the access they offer, the location and construction of new assets and the refurbishment of older assets.  In order to build new facilities, or expand existing infrastructure, regulated companies must demonstrate to the regulators that the assets will serve the public interest and will realize significant environmental benefits. This involves installing improved emissions-reduction technologies on equipment to conform to U.S. Environmental Protection Agency rules and the Clean Air Acts, for example.  Typically, though, the best available emissions-reduction technologies carry a cost of abatement. But through the regulatory framework, franchise companies include emission-reduction investments in their overall cost of service that determines the rates they charge their customers and rate of return they can earn.

Because regulated natural gas companies include abatement technologies, such as CarbonSaver, in their cost of service for rate-making, AHI will focus its market entry activities in the following three regulated markets: interstate pipelines, local gas distribution and power generation.

The near-term market for CarbonSaver is gas transmission compressors, with a particular focus on the U.S. interstate pipeline system. AHI will also target selected unregulated gas producers and midstream companies with field compressors as well as organizations that own and operate combined heat and power capacity in NOx nonattainment areas. This will require 70% to 80% of the resources of the company from 2010 to 2012.

Longer-term markets for CarbonSaver is local gas distribution systems and utility-owned gas-fired turbines. AHI expects to enter these markets as the company completes its scale-up targets in the 2013 to 2015 timeframe and after it has implemented capital and operating cost reduction strategies for large industrial CarbonSaver plants. This will require about 20% to 30% of the resources of the company from 2010 to 2012.