Global transport sector looks to ride natural gas boom
Reuters reported that natural gas has started to challenge oil as the dominant transport fuel with companies building gas powered ships and installing networks of service stations on water and land.
The expectation of cheaper gas and tighter environmental regulation have created demand for a cleaner alternative to the oil based fuels that have so far dominated the transport world.
Although European and Asian liquefied natural gas prices are currently high, trading at almost USD 20 per million british thermal unit in Asia and around USD 10 per million british thermal unit in Europe because of booming demand, analysts expect prices to drop substantially later this decade when new production rises.
Germany, Singapore and the Netherlands are among the countries investing in natural gas transport hubs while companies including Royal Dutch Shell, Gazprom and Total, are also developing LNG fuel infrastructure.
Germany is making its first move into LNG for transport after Bomin Linde LNG signed a deal in January to supply ferry firm AG EMS and it is now building 2 LNG bunker terminals in Hamburg and Bremerhaven, due to start operations in 2015.
Mr Ruben Benders, MD at Bomin Linde LNG, said that "Supplying their ferries with LNG makes AG EMS a pioneer in Germany and sends a clear signal that this low emission propulsion system has arrived here."
In the Dutch port of Antwerp, Europe's second largest, the harbour authority said that there are all kinds of initiatives through which the use of LNG as fuel for shipping is encouraged.
At Rotterdam, Europe's biggest port, LNG also plays an increasing role in transport as the Gate LNG import terminal has begun supplying local river vessels and port tugs, as well as sending it on for use in the Baltic Sea where LNG is also seeing a pick up in the marine sector.
In Asia, Singapore has invested in LNG bunkering capacity in anticipation of rising demand from large ships.
Singapore's motivation to enter the gas for transport sector is driven by the expectation of huge growth in China, currently still a small user of natural gas, but where new regulation is aimed at shifting the power generation sector from coal to gas and the transport sector from oil towards more gas use.
Energy consultancy Wood Mackenzie said that global gas demand in the transport sector could grow from under 5 billion cubic metres in 2012 to over 160 billion cubic metres by 2030, which would be equivalent to 2 years worth of current British gas demand or around 3 million barrels of oil.
Mr Noel Tomnay, head of research at Wood Mackenzie, said that "Gas has traditionally played a niche role in global transport but it is now garnering greater attention. Oil and gas price differentials are now making investment in gas re fuelling infrastructure worthwhile and increased environmental restrictions on emissions are encouraging wider global uptake."
Various new regulations on sulphur emissions in the shipping sector will come into place for much of the North and Baltic Sea as well as the US and Canada in 2015, which has driven interest in alternative fuels to diesel.
In North America, LNG is also gaining traction on land as a shale gas boom has led to a 50% drop in US gas prices since 2008, making it competitive with oil in the transport sector.
Shell and TravelCenters of America are developing a network of LNG truck fuel stations that will allow US coast to coast LNG fueled road transport within a few years.
Mr Bruce Carlton, president and CEO of the US National Industrial Transportation League, a trade association, said that "Gas is cleaner and gas is cheaper at least for now. We are seeing a lot of attention being given to conversions to gas/LNG in the USA. Rail is probably a bit behind but very interested in it as well."
Tucker Gilliam of US transport and logistics group Crowley Liner Services, whose firm has ordered 2 LNG powered vessels to operate between the US and Puerto Rico, said that LNG for transport would gain further traction.
He said that "As more is invested in infrastructure to produce and deliver the fuel, there will be greater opportunities for wider scale adoption. For Crowley, the driving force were significant environmental benefits."
Source - Reuters