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Page added on August 16, 2014
Next energy revolution will be on roads and railroads
From modest beginnings in the Barnett shale beneath the city of Fort Worth, unnoticed by most energy analysts, horizontal drilling and hydraulic fracturing spread across North America and transformed all aspects of the energy landscape in under 10 years.
Now the most important question for energy analysts is what technology will revolutionize the system next.
One of the most promising candidates has been taking shape along America’s highways and at a specialist rail testing centre in Colorado.
Locomotives powered by liquefied natural gas (LNG) have been tested for BNSF Railway at a private facility as the company takes the next step in a pilot programme that could eventually transform the railroad industry and lead to the next phase of the North American energy revolution.
The first phase of testing, involving stationary tests on private property, has been conducted at the Transportation Technology Centre in Pueblo, Colorado, using engines converted by Electro-Motive Diesel and General Electric and some LNG tenders inherited from previous trials two decades ago.
But BNSF will test LNG engine-and-tender sets in revenue-earning service on a limited number of tracks by the end of this year, according to the company. These dual-fuel engines are designed to burn diesel mixed with up to 90 percent gas.
People have been forecasting for several years that gas will become the transport fuel of the future; now experiments by BNSF are starting to make it a reality.
The financial incentive to switch is enormous, and the companies involved in testing LNG are among the biggest and most influential in the rail industry, with the engineering expertise and financial resources to make the change happen.
Some commentators have questioned whether natural gas could really replace diesel as the main fuel in use on U.S. and Canadian railroads, despite being much cheaper and cleaner. But sceptics risk missing the next big shift in the energy system.
The commodity cost of natural gas is around one-fifth that of diesel on an energy-equivalent basis, thanks to the shale boom, and the gap shows no sign of closing (link.reuters.com/wak62w).
Even after the costs of transportation, liquefaction and dispensing are factored in, LNG is around one-third cheaper than diesel, according to indicative prices provided by Clean Energy, the largest supplier of natural gas for transportation in North America (“Introduction to Clean Energy Fuels” June 2014).
The cost advantage could be greater in future if demand for LNG as a transport fuel expands and the industry is able to achieve bigger economies of scale.
Fuel is the second-largest operating expense for BNSF and accounts for a third of all the railroad’s operating costs, so there are strong reasons to investigate any technology that could slash the bill.
Set against this, doubters point to the capital cost of retrofitting locomotives to run on a mix of natural gas and diesel and building new tenders to carry the LNG, which is estimated at $1-2 million per locomotive by industry experts.
Railroads or fuel suppliers would also need to build an expensive network of new liquefaction facilities and fuelling terminals to support a fleet of LNG locomotives.
And safety concerns would need to be overcome. Railroads are currently forbidden from transporting LNG under hazardous materials regulations enforced by the Federal Railroad Administration.
FINANCIAL MUSCLE
BNSF, the most prominent railroad involved in testing LNG trains, is the second-largest in North America by revenue and carload volume.
“We’re serious,” about the potential for LNG trains, the railroad’s executive chairman told reporters at a news conference in North Dakota in May. “We are testing them right now”. (“BNSF executive sees big opportunity in switch from diesel to LNG locomotives” May 28)
North of the border, Canadian National, one of the two major railroads in Canada, is conducting its own tests for dual-fuel engines powered by a mix of LNG and diesel.
Natural gas has already made more inroads on the highways. Clean Energy Fuels supplies LNG and compressed natural gas (CNG) to trucking at more than 470 facilities in 43 states across the United States, including 180 public stations along U.S. highway network.
The company says it has more than 800 fleet customers and is fuelling over 35,000 vehicles every day, including mass transit, refuse trucks, delivery vehicles and heavy tractor-trailers.
Most major truck manufacturers now offer dual-fuel engines. Dual-fuel engines are also increasingly popular for oil and gas drilling and a number of other energy-intensive industrial operations.
There are likely to be synergies between the provision of LNG to the rail, trucking and industrial sectors. Rail and road users could share some refuelling infrastructure, cutting the costs for both systems, especially in the early stages.
Moreover, lessons learned in developing gas-engines for heavy trucks can be applied to locomotive engines, helping the technology develop faster.
ENERGY TRANSITION
Burlington Northern, one of the forerunners of BNSF, experimented with LNG-powered trains back in 1980, at the height of the second oil shock.
The trials were abandoned when oil prices fell, eliminating the financial incentive to switch. But the current gap between gas and oil prices has been open since 2011 and shows no sign of disappearing.
The first standard locomotives operating on a mix of LNG and diesel are unlikely to be available until 2017, according to industry insiders. But by the end of the decade, most new locomotives could be equipped with dual-fuel engines.
Based on the time taken for previous technology transitions in the rail industry, such as the switch from steam to diesel, the switch to a dual-fuel fleet could be largely complete by the end of the 2020s or early 2030s.
The potential for displacing diesel is enormous. U.S. railroads use 3.6 billion gallons of the fuel every year. Even bigger quantities are used in heavy-duty trucking (25 billion gallons) and in maritime transport (6.6 billion gallons), where switching experiments are also well underway.
If LNG suppliers can make major inroads into all these sectors, it would make a small but substantial dent in oil demand.
Current trials for LNG-fuelled trains are still in their early stages. No decision has been made whether to go ahead and order locomotives and tenders for regular commercial service, and a decision is unlikely to come before 2016.
But there appear to be no insurmountable engineering obstacles to switching to natural gas in the road, rail and shipping sectors. The only issue is the relative price of gas and oil.
As long as the price differential is expected to remain wide, the shift to gas will continue to accelerate.
17 Comments on "Next energy revolution will be on roads and railroads"
Makati1 on Sat, 16th Aug 2014 7:18 am
Dream on…
herrmeier on Sat, 16th Aug 2014 7:36 am
Yeah it comes as a surprise to doomers that people will do all kinds of stuff to mitigate the effects of PO. BAU will continue for a couple of decades longer, no doubt.
Beautiful planet earth has a hard time getting rid of the human pest.
Davy on Sat, 16th Aug 2014 7:40 am
I have said this here before that we are witnessing a distortion and manipulation of our energy markets with the shale gas Ponzi scheme made possible by financial repression of the FED and the Wall Street mafia financial marketing. This is all made possible by artificial liquidity and a bubbly stock market creating the necessary capex through debt. This debt will never be paid and will in effect be socialized with the profits going to a few. This is a classic society wide Ponzi scheme because the one in tears when it ends, as all Ponzi schemes end, is the consumer and tax payer. This shale gas Ponzi scheme has not been all bad. It has bought us some time but as in the past we are pissing that vital time away. The scary part of this shale gas Ponzi scheme is the market manipulation. Instead of husbanding our expensive gas resources for a narrow and vital range of uses mainly heating, industrial, agricultural, and on demand power producers, they are talking of expanding uses into transport, exports, and significant electrical production. I am not an expert on the geology but I read all the comments by those who are. It is clear in my mind we are heading down a dangerous path promoting a resource that is not a solid resource. It is not solid because the industry must maintain these reserves with constant drilling. This drilling is reliant on a solid economy. Our economy is not solid it is hollow. Instead of trying to expand gas markets we should be husbanding all energy resources. Built out infrastructure like coal fired plants and NUK plants must be maintained if they are efficient. We have the coal and uranium at least short term. I know AGW folks and anti-NUK folks hate to hear this but it will be short term. Oil depletion will take all other energy resources down with it. “BUT” we need to buy time in the adaptation and mitigation efforts that will come from either a liquid fuel crisis or economic crisis. If we have a solid energy base that is reality tested then we can buy some time to manage a fall in the randomness of descent. We should especially be building out dispersed end use AltE where possible. “AND”, yes, if we must build out large scale solar and wind let’s do it because the markets are set up to do it. This is not the best approach but anything is better than following the folly of a gas economy. Large scale solar and wind will eventually be shut in when the grid goes unstable and complexity fails for spare parts and unreliability. Yes picture a Pakistan/Iraq style electrical grid running part time. We are on a dangerous path driven by the Wall Street psycho’s. It will be a path that causes pain sooner and leaves us less likely to make some kind of preparations for the coming energy descent.
ghung on Sat, 16th Aug 2014 8:02 am
The energy density (MJ/L) of diesel is 38.6 (per wikipedia). The energy density of CNG is 9.
They’re going to need some big CNG tanks.
Kenz300 on Sat, 16th Aug 2014 8:30 am
It is time to end the oil monopoly on transportation fuels. The more competition the better.
Bring on the electric, flex-fuel, biofuel, CNG, LNG and hydrogen fueled transportation vehicles.
It is time to diversify our energy sources.
Davy on Sat, 16th Aug 2014 9:39 am
I was cooking breakfast and making an apple pie and thinking about the de-escalation of complexity. Man, am I a loon or what… Anyway, complexity de-escalation simply can’t be done top down only bottom up by a population that does it because they see the vital importance not because it is necessarily economic. The paradox of this situation is a population (some) choosing to de-escalate personally but through funds and earnings from a BAU that attempts to escalate complexity. The economy, social arrangements, and political command and control favor complexity because of economies of scale and progressive adaptive behavior that favors increased technology and adaptive complexity preferences. We are also lobbied by the cornucopian’s marketing strategies that technology, knowledge, and efficiency is better. We seldom here simplicity and less technology is better or more expensive reliability is better. We simply can’t manage de-growth for this reason. Managed de-growth will be forced de-growth. Since descent involves randomness of system fractures, technology abandonment, and dysfunctions of human nature the best we can do is manage the fall in a random forced de-growth as limits of growth and diminishing returns takes over. So how does this relate to the article well, instead of compressed liquefied natural gas driven trains that are moving WMD devices. We should just turn back to trains that are smaller, efficient, less complex, cheaper, and reliability robust. What we need also is the attitudes and lifestyles to go along with these changes. Finally we need an economy that allows this and promotes this. This is the problem we have and that is a hyper complex integrated global system that is orientated away from the necessary and vital changes that will be needed to survive the fall from complexity. In this sense the real revolution has to be the software of our human mind. Can we change? I am worried.
poaecdotcom on Sat, 16th Aug 2014 10:12 am
Davy,
Two excellent posts. thank you!
MSN Fanboy on Sat, 16th Aug 2014 10:16 am
Davy “the real revolution has to be the software of our human mind”
EXACTLY.
Luckily we know from history human beings are stubborn narrow-minded pests that are easily controlled via their appetite
So Davy, Can we change
NO,
And even when we hit those hard limits (as we are now) we just lie about the problem.
But one day lies will not work, we will be forced to change or die
unfortunately the carrying capacity will be “severly diminished”
i.e., when the mirage of lies ends, the only truth will be realising we have already jumped over the cliff.
And Welcome to the second dark ages
Luckily weve got some time yet, humans can lie to themseleves a looooog time and the limits are still out there.
Makati1 on Sat, 16th Aug 2014 8:22 pm
herrmeier, a few more decades of BAU? Nope. Maybe a few more years, but the wall/cliff is in sight and we are running faster towards it. I give it to 2020. Possibly sooner.
Apneaman on Sat, 16th Aug 2014 11:35 pm
Clean Energy, the largest supplier of natural gas for transportation in North America
So the company who stands to profit the most from this “transportation revolution” should be taken as the only necessary authority on the matter? Oh and they are looking for investors. Guaranteed, can’t miss, once in a life time and all the rest.
Boat on Sun, 17th Aug 2014 11:06 am
In the last 5 years the US has gone from over 1500 nat gas drilling rigs to 316. The nat gas market in N America is expanding rapidly yet because of fracking the price is cheap compared to the rest of the world. So cheap in fact it is getting harder and harder to justify even drilling for nat gas.
10 new pipelines going into Mexico either in being built or in immediate planning stages. The idea were running out in a few years in crazy. All evidence is quite the opposite.
Because of nat gas and CHP tech the power to heat and refine oil improves to 90% efficiency instead of coal at 33% and old nat gas tech at 60%. It’s no wonder refineries around the world are shutting down while the US increases exports of refined petroleum products close to 4 mbpd.
yes, we can import oil, refine it and resale it cheaper than refineries that use oil to refine oil. It’s a new world folks. Those who frack in large quantities like the US ate benefiting tremendously. Our demise is a little overblown. lol
Nony on Sun, 17th Aug 2014 11:18 am
The Marcellus is mighty. All hail the Marcellus.
Davy on Sun, 17th Aug 2014 11:38 am
Boat, cocain is great too, but the buzz doesn’t last long except with continuos lines being snorted. Eventually the nose and or the wallet give out. Plus the psychological damage is often irreparable. Sounds eerily like the shale gas revolution too me.
Nony on Sun, 17th Aug 2014 12:08 pm
We are at record U.S. production, with prices less than $4, and have less than 400 rigs drilling for gas.
Boat on Sun, 17th Aug 2014 12:10 pm
Davy, in 5 years we will have the same conversation with the same result. Growth of nat gas and your pending doom.
Davy on Sun, 17th Aug 2014 12:25 pm
Damn Boat, hope your right. I have a better life than most do you think I would want that to end? But if there is one thing I am good at it is smelling stink. Something wiffs of road kill when I hear all the happy shale talk. Yet, it would be wonderful for me personally to be ignorant as NOO pointed out. Ignorance is blissfull.
pctech on Mon, 18th Aug 2014 6:54 am
The railroads experimented with this before. It required that they have big LNG tankers with the locomotive consist. If we start using NG for motor fuel we’re going to burn through it a lot faster. As pointed out before the energy density is a lot lower than gasoline or diesel fuel