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Posted on 03/20/2012 5:18:57 AM PDT by thackney
Now that we know we can successfully produce gas from U.S. shale gas plays, the question remains: What do we do with all this supply?
Price differentials between the low U.S. natural gas prices versus diesel, gasoline and propane are providing incentives for fuel-switching in other demand areas aside from the electric power and industrial sectors, and the abundance of U.S. natural gas has prompted some oil and gas companies to find new ways to use gas.
The U.S. trucking sector offers the greatest opportunity for gas to substitute transportation fuels. Prior to the economic downturn, approximately 65 billion gallons a year were consumed by diesel vehicles; two thirds of the vehicle segment is comprised of large semi tractor trailers, said David Schultz, vice president of fuels at Pivotal LNG, a subsidiary of Atlanta-based AGL Resources. Through Pivotal, AGL is positioning itself using its existing gas liquefaction capacity to capture the growing market opportunities for switching to gas from other fuel options.
Liquefied natural gas (LNG) is a viable, economic and environmentally beneficial substitute for heavy duty truck and competes attractively with propane. Propane prices, which track oil prices, have risen along with crude, giving LNG a competitive cost advantage. Opportunities for fuel switching to natural gas will likely continue as U.S. gas prices and crude oil prices trade at a widespread, as demand for crude oil is enormous worldwide, and the amount of U.S. gas that can't participate in the international gas market is enormous, said Schultz.
LNG, which is a denser energy source than compressed natural gas (CNG), works best for heavy duty fleet vehicles, while CNG makes more sense for lighter vehicles such as personal cars or garbage trucks that require less energy density.
After trucking, the drilling rig sector is the second largest potential market for fuel swapping, with approximately 1 billion gallons of diesel consumed a year. Pivotal is selling LNG to EnCana to power rigs drilling in Louisiana's Haynesville shale play.
EnCana also has utilized gas-powered drilling rigs owned by Calgary-based rig provider Ensign Energy Services to drill at its Jonah field in Wyoming's Green River basin. The company, which owns 350 rigs worldwide, has a fleet of 16 rigs that can be powered by LNG or wellhead gas.
The company, which drilled the first well with a gas-powered rig in 2007, has received numerous calls from operators and producers interested in utilizing the rigs, said Will Matthews, vice president of marketing at Ensign.
"We see it as a three-legged stool of benefits. It saves operators a lot of money, it's significantly better for the environment and it utilizes a fuel that's domestically produced," Matthews said.
Beyond vehicles, rigs and marine vessels, new markets that represent new gas demand continue to emerge. In Minnesota, one company switched from using propane to dry corn to natural gas. In less than one corn drying season, they were able to pay off the dryers.
According to a 2010 IHS CERA report, Fueling North America's Energy Future, as much as 36 Bcf/d of gas would be required to displace transportation fuels if all North American light duty vehicles were converted to gas. If all diesel trucks converted to gas, 13 Bcf/d of gas would be required, or 6 Bcf/d if only heavy duty vehicles switched. An estimated 0.5 Bcf/d of gas would be needed to displace transportation fuels if all diesel buses switched to gas.
America's Natural Gas Alliance (ANGA) has touted the use of natural gas vehicles in the U.S. as a means of weaning U.S. dependence on foreign energy imports while creating jobs in the U.S. The organization said natural gas vehicles outperform conventional vehicles with a significantly higher octane rating, and provide better fuel efficiency and lower operating costs while reducing emissions. –
According to ANGA press materials, gas vehicles run 25 percent cleaner than vehicles powered by gas or diesel, and can help curb U.S. carbon dioxide emissions, of which transportation accounts for 30 percent. Gas-powered vehicles also can reduce smog-producing nitrous oxide pollutants by up to 95 percent.
Growing the infrastructure to support natural gas as a transportation fuel will be critical to growing the fleet of gas-powered vehicles on U.S. roads. Some efforts have been made to increase the usage of natural gas in transportation, such as natural gas corridor highways and fueling stations in California, Utah and Texas. Public bus fleets in cities such as Los Angeles, Boston, Dallas and Washington D.C. also have been converted to gas-powered buses.
Growing widespread use of gas in this sector is a chicken and egg situation, said IHS CERA Director of Global Gas and LNG Rafael McDonald.
"Why build a retail fueling station when you have no trucks on the road, and why would you buy a gas powered truck if you have nowhere to refill it?" McDonald questioned.
To lock down demand, cooperative efforts for gas consumption in the transportation sector likely will continue. One example of these efforts is Chesapeake Energy and GE's March 7 announcement of an alliance to promote the use of natural gas as a fuel for cars and trucks.
ANGA reports that 112,000 gas vehicles are on the U.S. roads today, and about 1,000 gas fueling stations in existence, mostly of which are concentrated in New York and California. Globally, more than 12 million gas vehicles are in use, according to the American Gas Association website.
McDonald said IHS CERA is even more optimistic on marine bunkers for gas demand in the transportation sector, particularly heavy duty marine bunkers, which use even more fuel than the trucks.
The ability of marine bunkers to burn LNG is critical in emission control areas in parts of the world where emissions of sulphur and nitrous oxides must be controlled, such as Northwest Europe, the Baltic Sea area and the U.S. East Coast; similar rules are expected to be adopted in the Caribbean and Mediterranean regions.
Farther out at sea, polluting fuels can be used, but some are deciding it's easier to go with a straight LNG ship. Scrubbers, which are used to curb emissions from power plants, also can be used on vessels to reduce emissions.
Shell's Efforts to Find Markets for Gas
Global efforts to develop the gas value chain are also underway. Royal Dutch Shell CEO Peter Voser told attendees at the IHS CERAWeek conference earlier this month that the company is working hard to find ways to use abundant gas supplies.
The use of liquefied natural gas (LNG) as a transportation fuel holds tremendous promise as a cleaner transportation fuel.
"As an alternative to diesel, it's a smart way to reduce emissions of sulphur-oxides and particulates," Voser said.
Shell is looking at using LNG as a marine fuel in Singapore and the port of Rotterdam, The Netherlands. The company also is preparing to make LNG available this year to fleet operators along the busy truck route from Calgary to Edmonton, Voser said.
The company will also install a small-scale gas-liquefaction plant in Alberta and dispense LNG at Shell/Flying J truck stops throughout western Canada.
"Drawing on the region's natural gas to produce to LNG, we believe fleets on this route could see a reduction in greenhouse gas emissions of up to 20 percent on a well-to-wheels basis," Voser commented.
Additionally, Shell is investigating ways to use LNG as a transport fuel in the rail and mining sectors, as well as in oil and gas drilling, Voser noted, adding that gas can provide "a cleaner source of electricity than coal for the world's growing fleet of electric vehicles, which would further reduce many countries' need to import oil."
Gas-to-liquids technology, in which gas is transformed into higher value liquid fuels and chemicals, is another area in which Shell is expanding the value chain for gas. In 2011, Shell opened the Pearl GTL plant in Qatar, the world's largest GTL plant. Pearl produces GTL gasoil, a clean-burning diesel-type automotive fuel, GTL kerosene that can be used for jet fuel, and a variety of chemical feedstocks for lubricants, detergents and petrochemicals.
"We think GTL technology could make a lot of sense in North America," said Voser. "It would further reduce the need for imported oil while deriving greater value from this region's natural gas resources."
GasX?
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Natural gas to boost U.S. trade, Lombard Odier says
http://fuelfix.com/blog/2012/03/20/natural-gas-to-boost-u-s-trade-lombard-odier-says/
Link only due to Bloomberg content
I’m all for technology and advancement and becoming energy-independent, but reading that article made my eyes bleed...
Ohhhhhh!
I thought this was another Joe Biden thread.
In the mid to late 90’s, IIRC, the USPS, Brooklyn Union Gas and some other fleet operators had LNG / gasoline vehicles.
You could refill the LNG at the pump behind the post office! (If you had the special charge cards)
Seemed like a pretty good system at the time. I do not know if they still operate that way
It would be ideal if the LNG could be pipelined, but it may be too volitile for urban or suburban areas
The only energy problem we have is the gummit.
Pray for America
NO, NO, NO,!!!!!!
That doesn't fit in with the "green energy" plan that Zer0 has laid out. We need solar, wind, algae, and bicycles to solve the emissions problem!!!!!
Availability of fueling stations has been the big issue. Truckers will not convert to LNG unless there are fueling facilities, and it makes no sense to install fueling facilities if there are no customers.
UPS has done something about it, setting up a corridor between California and Las Vegas
The new LNG-powered tractors will pull trailers on a transit lane linking Ontario, California, and Las Vegas, Nevada, along with UPS's 11 existing LNG tractors.Installing LNG pumps at truck stops along I-95 every 200 miles would do a lot towards making LNG viable as a truck fuel, and would do a lot more for promoting energy independence than subsidizing the Chevy Volt.UPS plans to build publicly accessible LNG fuel stations in Las Vegas and will be able to access existing fuel stations in Ontario, California, and Salt Lake City, Utah, filling in an LNG trucking corridor that extends from California to Utah.
Presently, UPS along with FEDex are converting their fleets of LOCAL delivery trucks from gasoline to natural gas.
From what I have read, both companies have secured long term price deals with natural gas providers in order to rid themselves from the wildly fluctuating gasoline prices. In the long run these deals will keep operating costs down.
This is how the free market works. Eventually other industries will do similar conversions fuel prices will eventually stabilize.
Yes. All is proceeding as it should. Across the country, individuals and businesses are making informed decisions about their individual situations and acting accordingly.
Amazingly, no government involvement is necessary and no tax breaks are required. Now, if we can just keep the grandstanding Congress from jumping out in front and passing legislation designed to accomplish what we're doing on our own already.
Zackly.
Now, sit down, Mr. T. Boone.
The only roadblock is government. PERIOD
I would gladly convert my cars to dual fuel use for NG and Gasoline as the conversion kits have been on the market for years.
However, there is only one NG filling station in Western New York which allows us lowly citizens to use. The others (16 or 17 I believe) are all owned by NY State (which should mean us but it does not) and we are not allowed to fill our vehicles there. Only DOT vehicles are allowed.
If it were not for NY State this would be a no brainer. You could use NG when it was available or simply flip a switch and run on gasoline if you ran out of NG. In my area I would spend most of the time on gasoline so the conversion would not make much sense.
I’m converting my house to “duel fuel” - ie, everything that can practically be NG instead of electric is going that way.
And for the rest, I’m putting in a NG generator,
for when “electricity prices necessarily skyrocket”.
They’ll probably never get to the point where it’s cheaper to make my own than to buy off the grid, but what if the electric grid simply isn’t there?
I believe there is also some type of tax credit involved.
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