The National Shift to Natural Gas

[spuwho]

The wall of supply of natural gas in the US is beginning to create the foundation of a major shift in how commerce is transported across the nation.  Over the years, various firms have tested the use of LNG as a potential diesel replacement, but access to supply and large cost variables made a general transition very difficult to support.

However, due to the growing availability of LNG now and with its incredible lower cost per BTU than traditional fuels like gasoline and diesel, railroads and trucking firms are in a race to see who can take advantage of the price differences LNG provides.



On a per BTU basis, LNG today equates to a cost of about $1.35 a gallon, compared to recent diesel pricing of $3.25.



BNSF, Union Pacific, Canadian National and other railroads are working with the engine makers extensively to evaluate, test and confirm the use of LNG in everyday service.  BNSF, the largest commercial consumer of diesel has already calculated that it would take just over $1B USD to convert their fleet.  However, due to the large price difference per BTU, they would save $1.5B USD annually in fuel costs once the conversion is complete. A calculation anyone in business can see is worthy of close examination.

The Wall Street Journal is reporting that suppliers have already started increasing their delivery network to prepare for the LNG boom. LNG terminals are increasing at truck stops to (Pilot-Flying J leading thus far) supply the wave of truck conversions in flight.



Some watchers of the train industry are predicting that this could represent the largest shift in motive power since steam was replaced by the diesel.

Oddly, the auto industry isn't moving so fast into the LNG path. Their focus has been on hybrids and battery technology. GM, Honda and a few others have experimented with fuel cell vehicles that use LNG to drive the catalyst to produce the power, but other than some demonstrators on large trucks, visibility in the auto space has been pretty slim.  While diesels are popular in Europe where taxes favors it over gas, car makers are just starting to bring the diesel engines in larger quantity.

So just as the large shippers move out of diesel to LNG, car makers move into diesel. A price shift could be taking place in the fuel for American daily drivers.

This shift from oil based energy to LNG based energy (if it takes hold) could present a major change in national energy consumption and by extension, energy policy.



http://online.wsj.com/article/SB10001424127887324539404578342540494619344.html

http://www.chron.com/business/energy/article/Natural-gas-could-be-cheaper-cleaner-way-to-run-3933795.php

http://www.bloomberg.com/news/2013-03-06/ge-races-caterpillar-on-lng-trains-to-curb-buffett-cost.html

http://www.csmonitor.com/Business/In-Gear/2013/0425/Why-natural-gas-fuel-is-a-better-fit-for-trucks-than-cars

http://news.nationalgeographic.com/news/energy/2013/03/130318-natural-gas-truck-stops/

http://www.environmentalleader.com/2012/12/07/first-phase-of-lng-trucking-corridor-complete/

[Charles Hunter]

The North Florida Transportation Planning Organization (TPO) is beginning a program to help local fleets convert to Compressed Natural Gas: http://www.northfloridatpo.com/news/tpo_commits_732464_to_regional_cng_conversion/

[Dog Walker]

A lot of fleet operations are considering move to natural gas.  Not only is it less expensive now, but because it burns cleaner there are lower maintenance costs on the engines.

I wonder if these will be "dual-fuel" engines or spark ignited engines.  A lot of stationary engines that run generators or pumps are "dual-fuel".  They draw in a gas-air mixture, compress it and an small spray of diesel fuel then ignites the whole mixture.  Supposedly this gives the advantages of a high compression, high temperature diesel engine with much lower fuel costs.

Spark ignited engines, like gasoline engines, would be much simpler to control and manufacture.

[spuwho]

Floridians appear to be adding to the NG demand.

http://www.orlandosentinel.com/business/os-fpl-pipeline-to-orlando-20130508,0,1838531.story

FPL's rising natural-gas use spurs push for new pipeline into Florida

PORT ST. JOHN â€" Competing with the high-pressure whine of natural gas surging through gleaming pipes, Florida Power & Light Co. executives on Wednesday dedicated their newest power plant: a monster overlooking the Indian River Lagoon that bolsters the utility's campaign to build an interstate pipeline from Alabama to Orlando.

Already the biggest consumer of natural gas in a state that is the nation's second-hungriest for the fuel, FPL is on a spree of building six mostly identical generators, from here in central Brevard County to South Florida. Each will be able to produce enough electricity for 250,000 homes.

Ensuring that those plants and others run by FPL have enough natural gas in years to come is now a top priority for the Juno Beach-based power company, which is reviewing bids for construction of the state's third long-distance natural-gas pipeline. The pipeline, which has yet to get approval from state and federal authorities, would tie into a hub in the Orlando area, where the flow of natural gas would join the state's larger distribution system.

"The two pipelines that exist have served Florida well but are getting near capacity. And by 2017, in light of new projects coming online in Florida, they will probably be at or not have sufficient capacity to serve Florida," said Mike Sole, FPL's vice president for state-governmental affairs.

The two pipelines already serving Florida, following routes along the Panhandle and under the Gulf of Mexico, provide the state with about 4 billion cubic feet of natural gas daily.


FPL's appetite for natural gas is enormous and growing, varying now from 1.2 billion to 2 billion cubic feet a day. The new pipeline would deliver as much as half of that, or 600 million cubic feet daily.

Sole said the new pipeline would not supplant FPL's current demand for the fuel from the two pipelines; instead, it would increase the reliability of the state's gas flow and meet future demand.

Florida Agriculture Commissioner Adam Putnam said the flow of natural gas into the state is "susceptible to disruption" because there are only two pipelines.

"So as we increase our reliance on natural gas, we must diversify how we get the natural gas," Putnam said.

A spokeswoman for Florida Gas Transmission, operator of the larger of the two pipelines, said her company "is supportive of any type of gas or electric infrastructure that would provide reliable sources of energy to meet the future needs of Floridians."

Sole said the unique feature of FPL's proposed pipeline is that it would carry gas produced by wells across a large part of the country, where the advent of fracturing â€" or "fracking" â€" has helped bring a bonanza of natural-gas production.

The other two pipelines draw primarily from wells in the Gulf of Mexico or in Gulf Coast states.

The Florida Public Service Commission has expressed growing concern about the state's dependence on natural gas. About 55 percent of the state's electricity now comes from natural gas, with an additional 25 percent from coal and 13 percent from nuclear.

"I don't see it so much as the state explicitly choosing natural gas. It's that we are getting rid of everything else," said Ted Kury, director of energy studies at the University of Florida's Public Utility Research Center.

The looming question for Kury and other energy analysts is what the rising demand for natural gas will mean for its price. Already, a company in Texas is gearing up to begin exporting a significant amount of liquefied natural gas to other countries.

"As long as natural-gas prices are $3.50 to $4 [per thousand cubic feet], that's fine for consumers," Kury said. "But you really can't escape the fact that natural-gas prices are $10 in Europe and they are $16, $17 in Asia and $15 in South America. How long do you expect prices to stay at $4 in the United States, when prices around the world are much higher?"

The new power plant in Port St. Johns, which cost nearly $1 billion and replaced a smaller, 1960s-era facility known for its 300-foot-high chimneys, will consume a projected 175 million cubic feet of natural gas daily.

The facility consists of three generators powered by what essentially are giant, gas-powered jet engines and a fourth generator powered by steam produced from the immense heat of those three engines. The plant will also carry on what had become a critical task of the old plant: protecting manatees from freezing weather by discharging warm water from the plant's cooling system into the Indian River Lagoon.

The new, 150-foot-tall energy factory required 2 million feet of cable, bristles with monitors and sensors, and is highly automated to squeeze the most electricity out of the least amount of natural gas and still minimize air pollution.

Even so, said Deb Nardone, director of Sierra Club's national Beyond Natural Gas campaign, nobody should be fooled into thinking natural gas is without environmental problems.

The fuel is better from the standpoint of producing less mercury, smog and acid-rain pollution, she said. But natural gas is as serious a climate-changing pollutant as coal, Nardone added, because it leaks from wells and pipelines and, once burned, adds to the levels of carbon dioxide in the atmosphere.