Tuesday, July 23, 2013

Could Natural Gas Fuel a Trucking Revolution?

  • Natural gas occupies a tiny niche in transportation energy, dwarfed by oil. Conditions are now right for that disparity to begin to change.
  • Heavy-duty trucking looks like the logical beachhead for gas, with higher usage intensity and more manageable infrastructure needs than light-duty vehicles.
The International Energy Agency (IEA) released its latest Medium-Term Gas Market Report in St. Petersburg, Russia last month.  Although the IEA sees the growth of gas in the power sector slowing, they also cite its emergence as "a significant transportation fuel."  What really caught my eye was their projection that gas over the next five years would have "a bigger impact on oil demand than biofuels and electric cars combined," in light of the US shale gas revolution and tougher pollution rules in China.

That's quite an assertion, considering oil's longstanding dominance in transportation energy.  As I noted in March, Italy, Pakistan and several other countries already have well-established demand for compressed natural gas (CNG) for passenger cars.  Despite these hot spots only 3% of gas is currently used in transportation, globally, based on analysis from Citigroup.  The IEA is forecasting that transportation growth will consume 10% of the projected global gas production increase of roughly 20 trillion cubic feet (TCF) per year by 2018.  That's 2 TCF per year of additional natural gas demand in the transport sector, equivalent to 1 million barrels per day of diesel fuel.

I'd be more skeptical about that figure if I hadn't seen a presentation from Dr. Michael Gallagher of Westport Innovations at the Energy Information Administration's annual energy conference in Washington, DC last Monday.  Westport specializes in natural gas engine technology for heavy-duty trucks and played a major role in implementing the LNG vision of the ports of Los Angeles and Long Beach, CA a few years ago. 

Dr. Gallagher made a strong case for gas in heavy-duty trucking, starting with the low cost of US natural gas compared to oil and its products. Initial growth rates in several segments look encouraging, including transit buses and new trash trucks, for which natural gas now has around half the market.  Growth in China has apparently been even faster, with LNG vehicles increasing at over 100% per year (from a small base) and natural gas refueling stations growing at 33% per year since 2003.

In the US, trucking companies can save $1-2 per diesel-equivalent-gallon in fuel costs, while new heavy-duty trucks equipped with natural-gas-compatible engines and fuel tanks cost from $50-75,000 more than conventional diesel trucks. A successful transition to gas for trucking will require  a combination of fuel availability, including retail infrastructure, along with high utilization to defray those up-front costs.

Gas supply looks ample for the purpose. The IEA's forecast includes an increase in US dry natural gas production (gas with the liquids removed) from 24 TCF last year to 28 TCF by 2018.  That's an increase of a little more than 11 billion cubic feet per day (BCFD.) Based on the latest assessment from the US Energy Information Administration, US gas resources equate to 87 years of production at that higher rate. 

From my perspective achieving this scenario depends less on the availability of the gas than on the ability of new transport-sector users to compete with other segments that are equally eager to use more gas.  In the last 4 years gas demand for power generation has grown by 6.8 BCFD, mainly at the expense of coal, and there are many who would like to see that trend continue.  The IEA report also cited US LNG export projects totaling more than 5 BCFD that already have either Department of Energy approval or signed contracts.  New gas supplies won’t wait around for transportation demand to emerge.

The biggest advantage that gas’s new transportation customers have is the value they stand to gain, compared to other gas users.  US LNG projects are selling into increasingly competitive global markets paying up to three times the US wellhead price of gas of around $4 per million BTUs (MMBTU).  However, exporters must cover the cost of liquefaction and shipping, so their netback over wellhead prices might not be that large. Meanwhile gas's encroachment on coal in the utility sector has been driven mainly by its low price.  As the IEA notes, we've already seen this trend slow and reverse somewhat as US natural gas prices recovered from last year's lows. 

Against that, the US retail price of diesel fuel through mid-June of this year has averaged $3.96 per gallon, equivalent to $31/MMBTU.  With retail LNG currently available at a small but growing number of locations for under $3 per gallon, the incentive for truckers to switch fuels looks substantial.  And with a typical heavy-duty truck burning more than 10,000 gallons per year of fuel, each gas conversion is equivalent to the consumption of several dozen automobiles.

Fuel transitions take time.  One of Dr. Gallagher’s charts showed that it took more than 40 years for diesel to displace gasoline from heavy-duty trucks in the mid-20th century.  A lot could happen along the way to a multi-decade shift from diesel to LNG and CNG, including new cellulosic biofuels or battery breakthroughs.  For now, though, gas looks like a strong contender to provide a cleaner, cheaper fuel with sufficient energy density to be practical for long-distance trucking.  This is a trend worth watching.

A slightly different version of this posting was previously published on the website of Pacific Energy Development Corporation.

17 comments:

Ed Reid said...

Diesel-cycle engines are more efficient than Otto-cycle engines. Natural gas can be used in Otto-cycle engines; and, it offers the opportunity to operate the engines at higher compression ratios than are possible with gasoline engines. However, the increase in compression ratio is limited by the composition of the natural gas, which varies as a function of source and of non-natural gas additions to the natural gas supply, such as mixtures of landfill gas and refinery tail gases.

Natural gas can also be used as the primary fuel for Diesel-cycle engines, piloted with #2 Diesel (5-25%) to facilitate compression ignition. In these applications, the compression ratio is the higher Diesel-cycle compression ratio; and, the engine efficiency is the Diesel-cycle efficiency.

LNG is the higher energy density form of the fuel; and, thus, is more suitable for heavy duty applications. However, since it is kept cold by evaporation of the lightest of the hydrocarbons in the LNG, its composition changes, as do its octane and cetane numbers, while it is in storage. This is the reason Burlington Northern used Refrigerated Liquid Methane, rather than LNG, in its testing of natural gas as fuel for its trains.

Natural gas also offers advantages in engine wear and life, since far less particulate matter is accumulated in the engine lubricating oil.

Geoffrey Styles said...

Ed,
Thanks for highlighting some of the many reasons that switching to natural gas entails a lot more than just slapping a new fuel tank onto an existing gasoline or diesel vehicle. This is why CNG/LNG trucks cost tens of thousands more than conventional units

I also wasn't aware that BN was refrigerating the fuel in its natural gas locomotive tests. Makes sense, both from a composition standpoint and to minimize losses.

Ed Reid said...

Geoff,

Just to be sure you understood, BN used a liquified fuel which was essentially 100% methane, not natural gas. That avoided both compositional variation based on fueling location and compositional variation resulting from evaporative cooling of the RLM during storage.

Geoffrey Styles said...

Ed,
I can see why they might want to do that for an initial testing program, but it doesn't sound like a very practical commercial fuel down the road. My understanding is that most US LNG availability on a local basis would be pipeline spec, based on BTUs/MCF.

Ed Reid said...

Geoff,

True enough. However, octane number is not directly related to heat content, but rather to chemical composition.
Both the heat content and the composition of "pipeline quality" gas vary, depending on the source(s) of the gas. Supplemental (un)natural gas mixtures, such as 1400 LP/air and mixtures of landfill gas and refinery tail gases, are blended to achieve a Wobbe Number which makes them interchangeable with natural gas in burner applications, such as ranges and ovens, water heaters and furnaces. However, their different octane numbers can produce knocking in internal combustion engines, requiring detuning or sophisticated electronic monitoring and control systems to avoid engine damage. This is a particular concern in engines subject to frequent acceleration and deceleration, as opposed to those operating at relatively constant speed and load. While this is probably not a huge problem when these mixtures are a very small percentage of a pipeline gas stream, it can be a huge problem at higher percentages, such as can occur in portions of the pipeline system as the result of "slip streaming". One of my clients had this problem with his engines as the result of "slipstreaming" of a landfill gas/ refinery tail gas mixture.

In the case of Diesel-cycle engines, the presence of higher concentrations of heavier hydrocarbons in the natural gas could actually reduce the percentage of Diesel fuel required to be injected into the engine cylinders to assure reliable compression ignition.

MarkS said...

Geoff,

One of the most rapidly growing segments of the US natural gas transportation sector is Compressed Natural Gas (CNG).
With new tank systems that allow trucks longer range, infrastructure that does not require liquification the introduction of larger engines and the lower price mentioned in your article, this is becoming the "go to" fuel choice for many trucking fleets.

Geoffrey Styles said...

Jess Holmes,
I've deleted your comment but reproduced it below, without the advertising link. If you would like to advertise on my site, please contact me.

"Trucking is a huge industry that could be affected by a switch to natural gas fuel, but we also can't underestimate the environmental impact that vehicle fleets in all other sorts of industries have on the issue. I'd be very interested in reading more of your posts on this subject in the future. Thanks for sharing the insights"

Portable Engines said...

Interesting facts about gas fuel!

sathyam shonkho said...
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Geoffrey Styles said...

sathyam shonko,
If you want to advertise on this site, please contact me. All comments containing unauthorized advertising will be deleted.

sathyam shonkho said...
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Truckers Logic said...

Excellent and helpful Blog! Thank you

Chicago Party Bus said...

Nice post. The future of the fuel we use is extremely interested. I too wonder how natural gas will fit in.

Stacey Beck said...
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Geoffrey Styles said...

Stacey Beck,
I've deleted your comment but reproduced it below, without the advertising link. If you would like to advertise on my site, please contact me.

"My husband is a truck driver and we have talked about this before. It's unreal how much pollution is in the air and big trucks don't help. I would love to see a change here soon, we have to be able to figure something out to help the situation."

James Duke said...
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Geoffrey Styles said...

James Duke,
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