Pickens, Chickens and Eggs: Using LNG as Transport Fuel

(Originally published on Platts.com) When T. Boone Pickens takes a notion to invest in something, he tries to make sure that everybody else takes the same notion.  So, when he announced that he was putting his money behind LNG filling stations in the US for long-haul trucks, people took notice.

But rhetoric is just the beginning. There is a huge need for the actual infrastructure to support the idea, commonly known as the chicken-and-egg conundrum. If Pickens — and Canada and China and Europe — build LNG-filling stations, will they (trucks, ships) come? They should. After all, gas is cheap, clean and plentiful. But support from government and industry is essential to get the egg to grow into a chicken.

Luckily, Pickens is not the first person to get behind the LNG-as-transport-fuel notion. It is happening all across the globe, with companies and countries pledging support for natural gas and LNG-powered vehicles and ships.

In Canada, the federal government is introducing regulations to discourage ships from using bunker fuel in the Great Lakes and within 200 miles offshore, which will encourage greater use of LNG in marine transportation, according to reporting from our Calgary correspondent Ashok Dutta. Trucks and even locomotives in Canada are also using LNG.

Shell is increasing its LNG-for-transport projects to include shipping the fuel to Canada and the US for trucking, and to Europe for marine use. The European Commission is proposing that LNG fueling stations be installed in all 139 maritime and inland ports on the Trans-European Core Network by 2020 and 2025, respectively.  Singapore plans to have LNG bunkering in place by 2014. And auto and truck engine makers such as Volvo and Westport are gearing up to make and market so-called HHP (high horsepower) engines which will use LNG as fuel.

But LNG is a tricky substance, needing cooling or compressing in order to move it, store it and use it. An LNG-fueled truck has to install a special thermal fuel tank to hold the super-cooled liquid. Also, special engines that run on LNG must be installed. So, is it worth the effort?

According to Ben Schlesinger, founding president of Benjamin Schlesinger and Associates energy consultancy, using gas for transport is a no-brainer. LNG is also clean; it eliminates 100% of sulfur and 20-25% of carbon dioxide emissions.

Also: “There is no price risk — it has been low for 20 years. It is easy to install in trucks. It is easy to hedge. The payoff for a vehicle is one year,” Schlesinger said at a lunch seminar on March 26 in New York (although other experts have put the payback period at 1-3 years).

The shipping industry also thinks that it is a good idea, chickens and eggs aside. At the Sea Asia CEO Roundtable last month, Precious Shipping’s managing director put it this way: “The fuel of the future is gas.”

So… LNG is clean, it is cheap, it is plentiful and industry and government are putting some commitment and money into the infrastructure. What more could anyone ask?  That it offers a new source of revenue for governments, perhaps?

The US state of Georgia has already thought about that, according to the local Times Herald.  On March 27, its Senate passed legislation that drivers who use LNG in their cars and trucks will not escape the state’s motor fuel tax. The bill had already been passed by the House of Representatives, and is now awaiting the governor’s signature.
Other states and countries will no doubt follow Georgia, making LNG as a transport fuel a win-win.