Shell Treads Carefully While Promoting LNG-Fueled Truck Fleets

For background, see also:

• natural gas corridors in the United States
• 2012 - 2013 proposed energy corridor for the United States
• little by little, we're getting there -- LNG corridors

The Wall Street Journal is reporting that Shell is stepping back a bit from funding LNG corridors in Canada.

Shell is tapping the brakes on plans to push natural gas as a fuel for the trucking industry.

The company confirmed it will not build a previously announced plant 20 miles west of Calgary that would turn natural gas into liquid form, known as LNG, for use in heavy duty trucks.

Shell still plans to build out a network of LNG fueling stations along a 900-mile stretch between Alberta and Canada’s Pacific Coast. But those LNG service stations, which will be operated by Pilot Flying J, will sell natural gas fuel created by a company other than Shell.

“We are definitely still interested, but it’s an emerging market so Shell has to take a balanced approach to these developments,” Shell spokeswoman Destin Singleton said.

So far Shell has not changed plans for two other LNG fuel plants – one in Geismar, LA, and one in Sarnia, Ontario, Ms. Singleton said. Once constructed, they could produce up to 250,000 tons per year of natural gas fuel for use in trucks and even ships as some tanker and ferry owners install the equipment needed to burn LNG instead of oil-based fuel.

The company has been pulling back from some North American investments as it tries to fund costly oil and gas projects around the globe, including selling off shale fields in the U.S. In December the company abandoned plans to build a multibillion-dollar plant in Louisiana that would have converted natural gas into diesel, citing skyrocketing costs.

Natural Gas Corridors In The United States

From The Wall Street Journal (the link will probably break soon):

Operators of some of the largest U.S. truck fleets, including Lowe’s Cos., Procter & Gamble Co. and United Parcel Service Inc., are accelerating a shift to natural gas fueled trucks, betting on new engine technology that promises to drop the cost of shifting from diesel fuel.

Home-improvement retailer Lowe’s wants its delivery company to shift all of its several hundred trucks to natural gas by 2017. P&G already has 7% of its trucks on gas and could reach as much as 20% within two years. UPS says it plans to buy 1,000 natural gas trucks by the end of next year. FedEx Corp. plans to shift 30% of its long-distance trucks to natural gas over the next decade.

For related stories, see the articles at the "tags." Natural gas corridors will now be tracked at "The Big Stories." 

2012 - 2013 Proposed Energy Corridor For The United States

At CleanEnergy. 

A Note To The Granddaughters

I always loved maps as a kid and the map at the link has me really excited. One just feels that the United States is the tipping point of a huge manufacturing burst due to the advantage we hold over Europe and Asia. It appears that no matter how hard the administration and activists try to slow the growth of the United States, America's growth will continue. Although the GDP was not great this morning, going from 0.4 percent to 2.5% is huge.

One could argue that there might be a "snowball rolling downhill" effect as each day passes and we get closer to the next presidential election. I'm not thinking of any actual policy changes, or changes coming out of Washington, but just a feeling of anticipation, excitement.

I assume that it is very much like the anticipation, enthusiasm that 47% (maybe more) of Americans felt when George W. Bush's second term was coming to an end. Right, wrong, or indifferent, many Americans were looking for a change. I think that the same anticipation and excitement will start to become more evident going forward. Even members of his own party, contemplating running for presidency probably understand Americans like "morning in America" speeches better than the "malaise in America" speeches, and that enthusiasm is infectious.

With OPEC no longer holding America hostage and cheap energy to boot, we certainly could be at a tipping point.

Or maybe I'm simply in a hyper-manic stage 'cause I'm back in Texas.

Which reminds me. I think I saw a headline over at Drudge linking Peggy Noonan. Here it is: the Obama fatigue factor, at the Wall Street Journal. I have not read the article, except what I saw in the first sentence while putting up the link, but my hunch is that her thoughts and my thoughts complement each other.

Almost As Good As The Bakken Oil Express Video -- The Chinese Coming To America To Fuel Our Trucks

A huge "thank you" to a reader for alerting me to the story. This is another big story. 

Reuters is reporting:

ENN Group Co Ltd, one of China's largest private companies, is quietly rolling out plans to establish a network of natural gas fueling stations for trucks along U.S. highways. 

With plans to build 50 stations this year alone, ENN joins a small but formidable group of players -- including Clean Energy Fuels Corp and Royal Dutch Shell Plc -- in an aggressive push to develop an infrastructure for heavy-duty trucks fueled by cheap and abundant natural gas.

Clean Energy is backed by T. Boone Pickens and Chesapeake Energy Corp. The move is yet another example of China's ambition to grab a piece of the U.S. shale gas boom.

Just last month, Sinopec Group said it would pay $1 billion for some of Chesapeake's oil and gas properties in the Mississippi Lime shale.

The natural gas bounty is also expected to help wean the U.S. transport industry off its dependence on diesel fuel made from imported crude oil, and the trucking industry is in a big push to use more of the domestically produced fuel.

Go to the link for a great photo.

I had trouble understanding the reason that "China" bought natural-gas heavy shale in America. It certainly makes sense now, doesn't it.

And who is going to use that natural gas? FedEx, for one. MSNMoney is reporting:

FedEx CEO Frederick W. Smith said he expects up to 30% of long-distance trucks to be powered by liquified (LNG) or compressed natural gas (CNG) over the next 10 years.

While there is ample research to show that the use of natural gas in transportation can reduce carbon emissions significantly, the high costs associated with these vehicles and relative scarcity of fueling stations have hindered their adoption up to now.

Here, we take a look at the key factors expected to drive adoption rates of CNG/LNG vehicles in the transportation industry over our forecast period. This trend is expected to improve EBITDA margins for the FedEx Ground segment, which makes up more than 67% of Trefis' current price estimate for the stock.

This story was also sent by the same reader, as the ENN story above.

Disclaimer: this is not an investment site; do not make investment decisions based on what you read at this site. 

Little By Little We're Getting There: LNG Corridors

I'm finally getting around to posting this; sorry for the delay.

The link is to a Westport Innovations press release. Westport Innovations identifies itself as the global leader in natural gas engines. Of note, the company offers 15-liter natural gas engines for the heavy-duty trucking market.

Others will be interested in the financial statement. This is why it interested me: it helps bring me up to date on natural gas corridors in the United States and in Europe:

US

The growth in natural gas infrastructure has been significant in 2012 compared to 2011.
Clean Energy Fuels has been actively developing the America's Natural Gas Highway with liquefied natural gas (LNG) and compressed natural gas (CNG) fuelling stations at strategic locations along major interstate trucking corridors. 

Shell and its affiliates have signed a memorandum of understanding with TravelCenters of America to sell LNG to heavy-duty road transport customers in the U.S. through TA's existing nationwide network of full-service fuelling centres. 

Other fuel providers such as Encana, FortisBC, and Gaz Metro have built permanent LNG refueling stations for Westport 15L fleets. 

New fuel providers such as Blu, have built two LNG stations in Utah. 

In addition, Conoco Phillips has expressed interest in building a small-scale natural gas liquefaction facility to manufacture up to 100,000 gallons per day of LNG to supply truck fleets in Dallas-Fort Worth, Texas.

EUROPE

A combined effort by major European gas companies, vehicle manufacturers and natural gas vehicle (NGV) associations have resulted in the Blue Corridor initiative to expand the NGV fueling station network in Europe. This 16 million Euros project is funded by the European Commission and 28 project partners.

In addition, in January, the European Commission announced an ambitious package of measures to ensure the build-up of alternative fuel stations across Europe. The proposal includes that by 2020, refuelling stations for trucks are installed every 400 km along the roads; and that by 2020 and 2025, LNG refuelling stations be installed in all 139 maritime and inland ports, respectively, on the Trans European Core Network.

I can't speak to Westport itself, but the buildout of American and European LNG corridors is exciting. Little by little, maybe we're getting somewhere. 

Another Milestone on the Road to a Natural Gas National Interstate System

Updates

December 23, 2012: The Colorado-to-Wyoming CNG corridor continues to expand. When I see these stories I am "thrilled" to see private enterprise doing this, but if the faux environmentalists and the current administration were serious about CO2, about addiction to oil, about Saudi imports, there would be a "Manhattan-like" program "to CNG" the nation.


October 17, 2012: Wyoming continues to push plans for CNG corridor.

A state legislative committee pledged support for two bills Tuesday which, if passed, could go a long way toward making Wyoming a leader in alternative fuels.

Meeting in Casper, the Joint Minerals, Business and Economic Development Committee first passed a measure that would slowly transition up to half of the state’s vehicle fleet to run on compressed natural gas by 2017. The second measure amends a state loan program to include compressed natural gas-related incentives.

October 11, 2012: "CNG in a box."

GE launched its “CNG In A Box” system this week, to expand fueling options for vehicles that run on compressed natural gas, the company has announced.

GE touts the all-in-one refueling system, developed in partnership with Chesapeake Energy affiliate Peake Fuel Solutions, as a plug-and-play solution that makes it quick and easy for retailers to expand their fuel selection.

At least 250 CNG In A Box systems will be distributed beginning this fall, the companies said.  CNG In A Box comes in an 8-foot-by-20-foot container, according to GE. The system compresses natural gas, delivered via pipeline, onsite and dispenses the fuel using a pump similar to that used at a traditional gasoline station.  

October 7, 2012: investment opportunities in natural gas as a transportation fuel; natural gas corridor; SeekingAlpha.com article.

May 15, 2011: Encana extends CNG corridor. This is from Rock Springs, WY, to Salt Lake City, UT.

Original Post

A great link sent in by "anon 1." This could compete for "top story" of the week. This story has so much on so many levels.

Shell and TravelCenters of America announced that starting in 2013, they plan to sell liquefied natural gas to on-highway customers through the existing network of full-service TA and Petro fueling centers. (LNG is viewed as a more suitable alternative fuel for long-haul operations because it has more range than compressed natural gas, or CNG.)

There's a  lot more at the link. Note the number of jobs that this initiative will generate. Politicians are having trouble coming up with ideas for jobs, but the private sector seems to be doing just fine.

See also this post on an update on the "natural gas national interstate system."

Later, Mike provided this link, asking whether GE's micro-LNG plants might not make sense for these refueling stations?

Update of the Natural Gas National Interstate System

Bakken growth refuses to stop -- a Motley Fool blurb that is not worth reading. I assume a paid subscription to Motley Fool provides better content, but the Motley Fool articles I've seen are pretty worthless.

On the other hand, SeekingAlpha.com seldom disappoints. One of the themes on this blog regarding natural gas is that if it is to succeed, users and suppliers will evolve together to develop an economically feasible natural gas national interstate system.

I don't follow this national interstate system but my "myth" is that long-haul truckers now have a natural gas interstate system from California to Nevada/Utah and on to Wyoming. SeekingAlpha.com provides an update of the national system.

On January 12 Clean Energy (CLNE) announced more details of the planned "Natural Gas Highway". The company has identified 98 locations and plans to have 70 stations open by the end of 2012 in 33 states. Here is a map of the company's planned refueling locations: [map at link.]

The first phase of the plan will be completed by 2013 and will include 150 natural gas refueling stations. Phase 1 is targeting major highway hubs including: the San Diego-Los Angeles-Riverside-Las Vegas cluster and the Texas Triangle (Houston-San Antonio-Dallas/Ft. Worth); CLNE is also targeting high use long-haul routes like Los Angeles-Dallas; Houston-Chicago; Chicago-Atlanta; and a network of stations along major highways in the mid-west region (IL, IN, OH, MO, KY, TN, KS, OK, AL) to serve the heavy trucking traffic in the area.

It looks like my understanding of the system is not too far off.

For simplicity, it looks like I-10, I-20, and I-80 are the most likely interstates to be targeted for coast-to-coast refueling stations.

With diesel hitting new highs, and natural gas hitting new lows, it should be just a matter of time.  It will be interesting to watch this unfold as we pass through the tipping point.