LNG And The Railroads

Updates

January 23, 2014: The AP is reporting:

Natural gas "may revolutionize the industry much like the transition from steam to diesel," said Jessica Taylor, a spokeswoman for General Electric's locomotive division, one of several companies that will test new natural gas equipment later this year.

Any changes are sure to happen slowly. A full-scale shift to natural gas would require expensive new infrastructure across the nation's 140,000-mile freight-rail system, including scores of fueling stations.

The change has been made possible by hydraulic fracturing mining techniques, which have allowed U.S. drillers to tap into vast deposits of natural gas. The boom has created such abundance that prices dropped to an average of $3.73 per million British thermal units last year — less than one-third of their 2008 peak.

Over the past couple of years, cheap gas has inspired many utilities to turn away from coal, a move that hurt railroads' profits. And natural gas is becoming more widely used in transportation. More than 100,000 buses, trucks and other vehicles already run on it, although that figure represents only about 3 percent of the transportation sector.

The savings could be considerable. The nation's biggest freight railroad, Union Pacific, spent more than $3.6 billion on fuel in 2012, about a quarter of total expenses.

Original Post 

Investors.com is reporting:

General Electric and CSX will begin field testing liquid natural gas-fueled locomotives, adding momentum toward a potential transformation in the railroad industry.

In trials set for next year, CSX — the third largest North American railroad by market value — will run trains pulled by compressed LNG-powered locomotives manufactured by GE.

Drilling techniques such as hydraulic fracturing, or fracking, have freed oil and gas deposits in shale fields like the Bakken formation, creating a glut of cheap natural gas that U.S. industry is increasingly adopting.

Using LNG would give railroads a cleaner, lower cost, more abundant fuel, GE Transportation CEO Russell Stokes said in a statement, adding that the impending use of LNG is part of "a new era of energy sources and what's possible for rail transport."

Warren Buffett is doing it, too:

In March, Berkshire Hathaway's BNSF Railway announced plans to test natural gas locomotives. BNSF CEO Matthew Rose said in June the railroad is working with GE and EMD, a unit of equipment maker Caterpillar, to develop technology for using LNG in locomotives.