A. Schulman is sizing up natural gas market

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A. Schulman The Fairlawn-based plastics company is starting a major initiative, in partnership with New Jersey's Absorbed Natural Gas Products (ANGP), to develop natural gas fueling systems that will be easier, safer and less stressful for consumers to use.

A. Schulman thinks it has found a way to corner part of the automotive market by developing crucial components for cars of the future.

The Fairlawn-based plastics company is starting a major initiative, in partnership with New Jersey's Absorbed Natural Gas Products (ANGP), to develop natural gas fueling systems that will be easier, safer and less stressful for consumers to use.

It's a move aimed squarely at the OEM market — Schulman and its partner are targeting customers like Ford, General Motors, Toyota and Honda — and not the small fuel-conversion companies that have dominated the U.S. natural gas vehicle industry to date.

"We're not even going to mess around with retrofitters and conversions. Our plan is to go with the OEM's full on," said Doug Gries, Schulman's director of market development and engineered composites.

While natural gas has been recognized in recent years as a cleaner-burning and cheaper alternative to gasoline or diesel fuel, often costing half as much or less than those competing fuels, vehicle manufacturers have so far balked at making cars and trucks that run on the stuff.

Honda previously made a version of its Civic that ran on compressed natural gas (CNG) at its plant in East Liberty, Ohio, but it stopped production of that model in 2015. Some OEMs work with conversion companies to provide CNG pickup trucks, especially for fleet customers, but they don't make vehicles designed from the ground up to run on natural gas.

Gries said ANGP has a solution that can change how OEMs think about natural gas as a fuel, and Schulman has been working to be a big part of bringing that solution to market.

"We engaged with ANGP back in April or May of last year," Gries said.

That happened only after ANGP looked broadly at the universe of potential partners and chose Schulman.

"A. Schulman, as a leading material solutions company, was selected to be the material and molding solution provider for the development of the tank after a careful review of all our options. We are excited to add the company's knowledge and expertise to our coalition to develop this technology for mass-market acceptance," said Bob Bonelli, ANGP co-founder and CEO, in announcing the partnership on Feb. 20.

Using new technology for which it has exclusive licenses, ANGP has developed a new type of fuel tank for natural gas vehicles. It requires the fuel to be contained at a pressure of about 900 psi, instead of the 3,500 psi or more that's used in existing CNG tanks.

"If you look at the tanks that are vehicles today, they're high-pressure cylinders that you have to take to an industrial filling station … with some consumers, that scares them a little," Gries said.

More importantly, he added, "For an OEM to accept (a natural gas fueling system) and put it on their vehicle as an option, there needs to be a better way."

The tanks that are being developed by Schulman and ANGP use a special carbon "monolith" that essentially fills the inside of the tank. The material is extremely porous with a large number of nooks, crannies and surface areas that can absorb natural gas at relatively low pressures, but release it quickly when the pressure drops as an engine draws more fuel.

Ironically, the process of filling the tanks is a bit like the reverse of the fracking process that extracts natural gas from shale rock. That process has been responsible for low natural gas prices and the push for natural gas vehicles in recent years.

By allowing the vehicles to use low-pressure tanks, it makes the use of the fuel safer, probably easier to market to consumers, and more suitable to home use, since the tanks could be refilled overnight with relatively simple equipment running from a home's existing natural gas lines, Gries said.

The new tanks also can be made in virtually any shape an OEM wants, so they can fit more easily into vehicle designs, including for bi-fuel vehicles that could run on both gasoline and natural gas, Gries said. They also can provide good range — close to 200 miles, even using a relatively small and lightweight tank, he said.

They're safer than existing CNG or even gasoline tanks, which can blow up when punctured. Gries said that if a carbon monolith tank is punctured or even shot with a rifle, it still releases its gas slowly and produces only a small fire for a few minutes.

Schulman's role, initially, is to develop a membrane that is needed to wrap the carbon monolith that holds the natural gas. It already can do it, but it's still working out how to best manufacture the membrane in larger volumes, Gries said.

The technology that Schulman is bringing to the project largely comes from its 2013 acquisition of Chicago-based Citadel Plastics in 2013. With a price of $800 million, it was Schulman's largest acquisition ever, but it quickly soured and was blamed for large losses at Schulman, which is now suing Citadel's former owners for fraud. The new initiative shows some value gained from that acquisition, even as the suit continues.

"Don't think I'm not aware of that," Gries said with a chuckle.

Schulman's ultimate role, however, will be much larger. It will be the final manufacturer of the tanks themselves, with ANGP shipping carbon monolith components to Schulman, which will then wrap them in its membranes and build tanks around them so they can be mounted in vehicles.

"The plan is for us to try to capture the whole value chain," Gries said.

But where it will do that is still up in the air.

"That's to be determined — we still have a lot of development work to do," Gries said.

But the company believes the initiative will result in a major new product line for Schulman, and one that has a lot of value-added engineering that could help the company's margins as well as its sales.

Gries said he's confident that natural gas will catch on as a popular vehicle fuel. Using is just makes too much sense, he contends.

And, as an added bonus, Gries said Schulman also expects to develop still more technology related to natural gas, which it could use in other markets that it serves beyond the automotive realm.

"We're already looking at the industrial market for CNG," Gries said.