by Sheena Martin, Contributing Editor

With the move towards greener technology continuing in earnest, car and engine manufacturers are learning to harness the energy from natural gas.

Not only is it a cleaner-burning fuel, it also has the potential to oust oil products that currently fuel millions of cars.

One company leading the race is Westport Innovations, Inc. (Nasdaq: WPRT). The company is breaking the mold through research, development and marketing of high-performance engines and fuel systems.

However, those engines aren’t fired by gasoline or diesel. Instead, Westport works with gaseous fuels. This includes compressed natural gas, liquefied natural gas, hydrogen-enriched compressed natural gas, and hydrogen.

And with recent support from Congress, Westport is looking at a growing market, evidenced by the 145% surge in its share price so far this year.

And Westport is just getting started…

Hej, Sweden!

Westport just signed a deal with Volvo (Stockholm Stock Exchange: VOLVb), the world’s second-largest truck manufacturer – a deal that will see Westport become the foremost supplier of heavy-duty natural gas engines to the Swedish automaker’s fleet of large trucks.

“It’s a big deal for the industry that the biggest (diesel truck makers) are announcing that they are getting into natural gas,” said Westport CEO David Demers after the announcement.

The market thought so, too, sending Westport shares up 13% on the news.

Under terms of the deal, Westport and Volvo will share program development expenses and Westport will have to satisfy unspecified milestones in order for the agreement to continue.

Assuming Westport can deliver as promised, similar companies with large fleets could consider Westport’s engine designs. In fact, food service giant Sysco Corp. (NYSE: SYY) is currently looking at using natural gas for its fleet of more than 7,000 tractor-trailers.

So with the potential to bag more contracts, Westport might not be done growing.

What’s more, the price of natural gas is currently cheap compared to crude oil – and is expected to stay that way through 2010. This makes natural gas an enticing prospect to fleet owners.

And with Westport’s recent deal with Volvo, you can bet that more companies will consider it for their own design. And as more of them consider cheaper, cleaner natural gas, Westport’s shares could jump higher.

Sheena Martin

P.S. Federal programs also support Westport’s growth. In August, the Department of Energy’s “Clean Cities” program was announced. The goal: to reduce petroleum consumption in transportation. The details…

• A total of $300 million in funding was awarded to 25 cost-sharing projects.
• More than 9,000 alternative fuel and energy efficient vehicles will be deployed.
• 542 new refueling stations will be built.

Westport anticipates its innovative engines to make up a considerable portion of the 2,800 compressed and liquefied natural gas vehicles funded through this program. And that’s important. Since 2007, Westport has sold about 200 of its heavy-duty natural gas engines. And it expects sales volume to top 1,000 in 2011.

While the market for natural gas-powered trucks is still tiny, tighter vehicle emission regulations and government incentives to go green mean fleet manufacturers and operators are looking for cleaner alternatives. And Westport is at the head of the line.

View original at: Investment U

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