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Shell sees long-term future for LNG and hopes Alberta project will prove the case

PARK CITY, Utah - Shell sees a long-term future in natural gas as a viable option for transportation and an Alberta project is figuring prominently in the company's plans to show fleets the potential for this alternative to diesel fuel.

PARK CITY, Utah – Shell sees a long-term future in natural gas as a viable option for transportation and an Alberta project is figuring prominently in the company’s plans to show fleets the potential for this alternative to diesel fuel.

Shell’s Canadian Green Corridor, the company’s first large scale liquefied natural gas (LNG) project in North America, launches this March. Initially employing a mobile refueling unit to service the needs of fleets running the Edmonton to Calgary corridor, the company also has agreements in place with three Flying J stations in the corridor for them to supply LNG starting in the third quarter of this year. By the third quarter of next year Shell plans to be supplying LNG to the network from its own LNG plant at the Jumping Pound facility about 30 kilometers west of Calgary. The new plant would produce 0.3 megatonnes per year of LNG, natural gas that is supercooled into liquid form. Until the plant is operational, a third-party distributor will be providing the LNG.

And Shell’s aspirations for converting the trucking industry to LNG don’t stop with this project. It is ready to build the infrastructure beyond this corridor if there is sufficient interest.

“We are not stopping with this project. If you are going to be in this market, you’ve got to be in it. We have aspirations to go all the way to the West Coast,” said James Burns, general manager, LNG transport Americas at a press briefing.

This year will mark the first time that Shell’s natural gas production will outpace its oil production and Burns says the company sees that trend continuing.

There are several factors making LNG an attractive alternative to diesel, he explained. The supply of natural gas in North America is abundant and has increased considerably in recent years as prolific new shale-gas deposits have been tapped, to the point where we have enough to export rather than relying on imports of natural gas.  Natural gas is also one of the cleanest burning fossil fuels, capable of reducing well to wheel CO2 emissions for heavy duty trucks by 20%. It has very low sulphur content so Sox emissions are also greatly reduced.

Road transport uses 17% of the world’s energy and contributes 25% of CO2 emissions. That can only increase as the world’s population climbs from the current 7 billion to an estimated 9 billion by 2050.

“We need more energy and lower carbon forms of energy,” said Dan Arcy, global OEM technical manager, Shell Global Solutions (US) Inc., adding that the reality, however, is that by 2050 two thirds of all our energy will still come from sources currently being used (current engine technologies and conventional liquid fuels).

It takes decades for alternatives (such as electric-powered vehicles) to take root, he emphasized. Shell officials believe that diesel and LNG will be the fuels of choice for transportation in 2050.

Shell officials provided fuel mileage comparisons to diesel for both LNG and condensed natural gas (CNG).

  • – 1 gallon of diesel gets 6.5 mpg; it requires 15 gallons to go 100 miles
  • – 1 gallon of LNG gets 3.8 mpg; it requires 28 gallons to go 100 miles
  • – 1 gallon of CNG gets 1.7 mpg; it requires 58 gallons to go 100 miles

Although diesel has the obvious advantage in mpg, Burns said what must also be taken into consideration is that LNG will be sold at about 30% below the current price of diesel and diesel pricing has the potential to climb higher still as oil supplies continue to dwindle. There is also the benefit of GHG reductions from running LNG. Burns estimated a payback from the investment in LNG-equipped vehicles of two to three years.

One obstacle is the considerably higher current cost of LNG engine-equipped trucks (up to $50-60,000 higher in cost or more than 50%) and also the need for fuel tanks that weigh more than their diesel counterparts.

“We need to get to a tipping point where incremental costs (for switching to LNG) start to come down,” Burns conceded.

Shell is teaming up with LNG engine maker Westport Innovations of Vancouver to co-market the advantages of LNG to fleets in North America. Their initial target market is large, sophisticated fleets running regional runs in Alberta.

Shell officials appreciate that Canadian fleets will need to be convinced to make the switch to LNG and so it will make available to them at least one LNG truck for one-week tests.

The company is also teaming up with equipment manufacturers to raise interest in the fuel among railways, miners and the marine shipping sector.

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