Interstate staple TravelCenters of America LLC (TA) and Royal Dutch Shell Plc (RDS.A) have teamed-up through a definitive agreement between TravelCenters and Shell Oil Products U.S. to build and operate a network of natural gas fueling lanes at fuel centers throughout the country.
The deal was originally set in motion in 2012 with a memorandum of understanding between the companies.
Per the deal, Shell will pay for and construct a minimum of two natural gas fueling lanes for tractor-trailers and other large trucks and related storage capacity at up to 100 TA and TA’s Petro Stopping Center locations over the next few years. Shell will supply the natural gas fuel with each company marketing to their customers.
The companies will initially be focused on liquid natural gas, but could be modified for other fuel types, such as compressed natural gas.
“The agreement, for TA, represents a prudent approach to an emerging market. Over time, TA believes natural gas will become a significant fuel for the trucking industry,” said Thomas O’Brien, president and chief executive at TravelCenters.
O’Brien added that the companies are working on selecting locations and hope to have the first lanes operational within one year.
Sales of natural gas vehicles are gaining some traction recently. Ford said in March that it had sold a record number of natural gas vehicles in 2012. Sales were up more than 200 percent from 2010 with 11,600 units sold.
Westlake, Ohio-based TravelCenters operates more than 500 restaurants, 244 full-service gas stations, convenience stores, maintenance services, including “RoadSquad Connect,” and more across 41 states.
Last month, the company topped analyst predictions of a loss of 11 cents per share for the fourth quarter, with a loss of $2.46 million, or 8 cents per share. For the whole year 2012, TA reported a profit of $32.2 million, or $1.12 per share, up from $23.58 million, or 98 cents per share in 2011, as the company benefited from better profit margins, despite declining fuel sales. Revenues in 2012 increased slightly to $8.0 billion, versus $7.9 billion the year earlier.
Shares of TA have been on cruise control straight upward in 2013, ending 2012 at $4.50 and rising to a high of $10.97 last week. It was the highest level for the stock since February 2008.
Shares closed Monday at $10.40, down by 1.7 percent for the day.