Trucking Industry, Slowly But Surely, Switching To Natural Gas -- September 12, 2014

From Forbes earlier this week:

Last week Anheuser-Busch announced that it was going to replace all 66 of the heavy duty trucks at its Houston brewery. This was no obvious business move. The trucks in its existing fleet are not old or falling apart. Like the Clydesdale horses of yesteryear, these are tough, reliable diesel-powered workhorses that pull 53-foot trailers loaded with 50,000 pounds of beer.

Yet A-B is putting all these diesel workhorses out to pasture — and replacing them with 66 new trucks, that intead run on compressed natural gas.

It’s significant that A-B feels comfortable swapping for an entire fleet that runs on CNG.

The intention of shifting to natgas, says James Sembrot, A-B’s senior transportation director, is to reduce carbon emissions and fuel costs, while doing something green(ish). 

The Houston brewery is among the biggest of the 14 that A-B operates nationwide. The closest breweries to this one are in Fort Collins, Colo. and St. Louis. Each truck rolls virtually around the clock — putting in an average of 140,000 miles in a single year hauling beer to wholesalers. They move seventeen million barrels of beer each year.

In other words: if Texans want to put Bud Light in their mouths (and hell yeah they do) then these trucks gotta haul.

RBN Energy: new liquefaction plants to serve US truckers and frackers.

Many exploration and production (E&P) companies have indicated their sincere interest in at least partly weaning themselves away from diesel—and onto natural gas, much of it from LNG—as their fuel of choice for the engines that power their drilling rigs and hydrofracturing pumps. But there has been some hesitance in making the switch, in part due to concern about whether the LNG-supply infrastructure is sufficiently reliable.

The same is true for railroads, trucking companies and ship owners—they too see potential savings in moving to engines fired partially or entirely by LNG, but they need assurance that their new fuel source will be plentiful and at hand. Today we detail all the new liquefaction capacity being developed specifically to serve these new markets

In Part 1 of this series, we explained why diesel’s dominance as the engine fuel for the E&P and heavy-duty transportation sector may be threatened over the next few years by natural gas. It comes down to economics and environment.

Diesel prices are based on the price of crude oil, and US natural gas is selling at roughly one-quarter the price of crude on a per-BTU basis these days. Even when the costs of liquefying gas and transporting LNG to customers are factored in, natural gas from LNG is consistently less expensive than diesel. Also, rules regarding diesel and shipping fuel emissions are tightening.

The key question becomes, how quickly can fuel-cost savings justify the investment required to retrofit diesel engines to burn a mix of diesel and natural gas (or buy new engines that burn only gas), as well as the cost of adding LNG storage and re-gasifiers?

In Part 2, we pointed out several calculators that can help address the should-we-switch conundrum, noted some pretty big E&P names already testing the potential for dual-fuel and gas-powered engines, and listed the seven existing liquefaction plants (totaling about 580 Mgal/d) that are not utility-focused “peak-shaving” facilities.

This time we examine the far greater amount of liquefaction capacity being planned to provide LNG to the domestic E&P, mining and heavy-duty transportation markets—and, with Canadians being so friendly and all, we are including their projects in this as well. A reminder: As we said in our last episode, a 100 Mgal/d liquefaction plant—pretty typical for what is being planned—would require about 8.3 MMcf/d, or about 3 Bcf a year of natural gas.

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400 PPM

During that short period between a very hot summer (high a/c - electricity - natural gas use) and the very cold winter (high natural gas heating use), the natural gas industry takes an opportunity to fill natgas storage tanks. With this highly unusual early cold snap a lot of natural gas is going to be burned, instead of being stored.