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."
What would be the cost per mile verses gasoline?
How big a tank would I need to go 350 miles in my Honda Accord?
Will the horsepower be affected?
What about safety in a collision?
How long will a fillup take?
There are probably more, but that's just off the top of my head.
They do not need tax payer incentives. The market is moving forward already. There are about 112,000 NGVs on U.S. roads today.
But some incentives do exist already.
http://www.ngvc.org/incentives/index.html
Honda has made the Natural Gas Civic for many years and is now expanding the locations where it is being sold.
The range is 216 to 305 miles city to highway driving.
More info at:
http://automobiles.honda.com/civic-natural-gas/specifications.aspx
But the increased overall supply of NG should also drop the price of LPG, as the source of that is also NG, should it not? And in point of fact, might not LPG function as a "bridge fuel" to CNG?? Conversion of a gasoline powered vehicle is much easier than for LPG than for CNG. Given the ubiquity of the use of LPG in motor homes (not as engine fuel, but for heating, refrigeration, and generator fuel), there are probably already many more "fueling stations" in existence than for CNG.
Heck, even the little "convenience store/gas station" near my home has an LPG "fueling station", and this is WAY "out in the sticks".
Hmmmm.....interesting info. I wasn't aware that could be done. Gotta read up on that....thanks!
Makes the potential speed and breadth of application MUCH wider. I'm just about the read Newt Gingrich's book "Drill Here, Drill Now, Pay Less". I'll be interested to see what "he" has to say.
Actually, I see the opposite happening. There is so much new exploration and production going after the more valuable Natural Gas liquids (ethane, propane, etc) that the Natural Gas supply is out growing the demand. The Natural Gas has nearly become a byproduct in some areas. The demand for additional Natural Gas Processing Plants is still very high while the drilling into "dry" Natural Gas fields continues to fall.
And in point of fact, might not LPG function as a "bridge fuel" to CNG??
I don't see that.
Conversion of a gasoline powered vehicle is much easier than for LPG than for CNG.
Which is the much of my answer above. The LPG has more energy per volume, is handled as a relatively low pressure liquid compared to the high pressure gas of NG.
Given the ubiquity of the use of LPG in motor homes (not as engine fuel, but for heating, refrigeration, and generator fuel), there are probably already many more "fueling stations" in existence than for CNG.
Certainly. That much higher demand equals higher prices. Plus part of that higher demand is industry that uses Natural Gas Liquids as feedstock to make plastics and the like.
They keep saying that drilling for oil will not lower gas prices. We drilled for natural gas and it is now half the price it was a year ago on the commodities market. I’m sure there are some other things at play, but still. If drilling could even drop it 20%, please for the love of God, drill!
Rail LNG Train example:
http://www.users.qwest.net/~kryopak/mk1200G.htm
Shell has been in the works for a while for LNG as Marine Fuel.
The Natural Gas Act failed passsage in the Senate last week by just a few votes short of 60, as I recall. The Heritage Foundation opposed it ...
http://heritageaction.com/2012/03/senate-rejects-nat-gas-act/
Thanks for posting that.
The government does not need to take tax payer dollar to promote or compete with different technologies.
End all the subsidies. Tax them all equally like other industries.
I’m betting it was misleading talk to run up the stock prices.
I don’t believe anyone is willing to lock up technologies that would allow them to make Bill Gates their pool boy.
OK, I see your point. But isn't that a temporary condition?? I suspect that what is driving demand for those liquids is for chemical feedstocks (ethylene/propylene). There are only so many plastics/etc. that can be made, so I would expect that demand to become saturated at some point, and more LPG becoming available. As you say, right now, C1 is almost a waste product, so available disproportionately cheaply.
That is why the notion of using C1 directly in diesel engines is so intriguing. I was (as I now see incorrectly) thinking that uses currently powered by diesel would have to switch to spark ignition to use CNG. If it can be used directly, that changes THAT "ballgame" a LOT.
I agree it will be temporary. But I am guessing it will be driven more by increased demand in C1 rather than a saturation of Natural Gas Liquids. NGLs are not as expensive to transport and the world begs for cheap plastic. Consumption is easy to climb with developing countries. Also we can keep the NGLs and build more facilities to export polymers.
C1 for transportation is going to increase. There is too great a difference in $/BTU.
Yes you can. The city I live in is using the sewer/water bill to pay for city services. My last months bill was $143.44 for sewer and water.
We are in absolute agreement on THAT point. The only questions at this point are by what path, and how fast. I tend to think mostly of road transport ($4.50 gas (which is what I paid yesterday) tend to encourage me to focus that way), but the train and ship connections are likely to come sooner, especially with the C1/diesel "hybrid" technology mentioned upthread.
Have you seen T Boone Pickens plan for 150 highway LNG stations?
http://www.freerepublic.com/focus/news/2861330/posts?page=25
Had missed that. Thanx for pointing it up.
Hmmmm.....interesting info. I wasn't aware that could be done. Gotta read up on that....thanks!Diesel-electric locomotives could very easily run on NG, because diesel engines can use it directly so long as you don’t make the fuel-air mixture rich enough to auto ignite. You just use a pilot charge of diesel oil to trigger ignition. A thermodynamically very efficient use of fuel, especially desirable when gas is so relatively cheap.
Makes the potential speed and breadth of application MUCH wider.
My source is recollection from my textbook from college half a century ago. Running a diesel engine on natural gas as described above was done in Alaska because NG was much cheaper locally than diesel oil - back before that book, titled IIRC “Internal Combustion Engines,” was written. The text described the result as follows: “ . . . may be the most efficient prime mover in existence.” The text also said that the combustion of the lean NG-air mixture in a diesel engine was smoother than the notorious “diesel knock” of the same engine running on oil.The textbook indicated that the fuel-air ratio could be modulated to control the power output, but my suspicion was that load control was needed to make it really practical. That is, IMHO you really need to control the power output by controlling the RPM of the engine (power output for a diesel being roughly proportional to RPM). That’s pretty much impossible with a conventional mechanical transmission with a finite, and small, number of gear ratios. You would need either a continuously variable transmission (which in general has not been available as a practical matter) or to use a generator to convert the power from mechanical to electrical, and electric motors to accomplish the CVT function. And I think that is precisely what the diesel-electric locomotive actually is (it’s certainly what a “hybrid” automobile is - with the added feature of battery energy storage, which makes the problem of engine power control even less of an issue. Since the hybrid auto places fuel economy above initial-cost considerations, and since engine RPM is independent of vehicle speed in any hybrid, I’m a a loss as to why they don’t go whole hog and power hybrid cars with diesel engines to get even better fuel efficiency).
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