June 15, 2012
Coming soon: LNG at your pit stop
Last week, energy giant Royal Dutch Shell PLC (Shell) made an announcement that will help pave the way for increased use of natural gas vehicles in the United States. Shell announced a partnership with TravelCenters of America, an American gas station operator, to supply LNG for heavy-duty trucks at 100 fueling stations across the U.S. by 2013.
What does this mean for the future of natural gas? When a major player in oil and gas makes a commitment like this to an alternative fuel, it’s a game-changer. Shell has made a commitment to natural gas not only as a practical transportation fuel, but also as the fuel that will replace oil as prices continue to skyrocket.
While Shell already made a similar arrangement for the routes between Fort McMurray and Vancouver in Canada (the Green Corridor Project), this move to provide natural gas fueling infrastructure in the U.S. will enable the adoption of natural gas vehicles on a larger scale. Shell has made this strategic move in response to the continuing rise of diesel and gasoline prices and the growth of the natural gas industry. In 2012, for the first time in Shell’s history, the company’s gas production outpaced its oil production.
James Burns, Shell’s manager of LNG transportation fuels has said that Shell intends to entice truck fleets to buy LNG-powered trucks and to pump Shell LNG by selling long term contracts with fuel price guarantees of natural gas remaining at least 30% cheaper than diesel for the lifetime of the trucks. With an incentive program like this, the chicken and egg situation – whereby fleets are hesitant to invest in natural gas vehicles because of lack of infrastructure, but infrastructure isn’t developed due to lack of fleet demand – may no longer be an issue. Between Shell and Clean Energy, who intends to create “America’s Natural Gas Highway”, the future of natural gas infrastructure has a clear path for growth.