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Page added on June 4, 2015
Natural Gas Will Chop Away at Oil’s Dominance as Transportation Fuel
A new study by IHS forecasts significant growth and value in the market for natural gas as a fuel in the heavy-duty transportation sector. The report, “LNG in Transportation: Challenging Oil’s Grip,” says that the use of natural gas as a transportation fuel could displace more than 1.5 million barrels per day (mbd) of oil demand by 2030.
Despite the report’s title, that figure and the study’s findings include both liquefied natural gas (LNG) and compressed natural gas (CNG) for heavy-duty transportation.
The report says a combination of drivers – environmental, technological and commercial – will drive greater adoption of natural gas in transport. The highest level of adoption will be in high-fuel-consuming applications such as trucks and ships.
“The fall of oil prices has diminished much of the glow from what was an overly optimistic market opportunity for natural gas in transportation,” says Michael Stoppard, chief strategist for global gas at IHS Energy. “Nonetheless, the shift to greater use of gas in trucks is set to continue.
“It is widely accepted that power generation is the primary growth market for natural gas demand, but gas as a fuel offers a new market with potentially more value,” he adds.
The study says that worldwide oil consumption in trucks is almost as high as in cars but notes that it is often more economic for truck fleets to switch to alternative fuel sources. Truck fleets have a relatively quick turnover, which could lead to faster adoption of new technology, the report explains.
IHS forecasts that natural gas demand in trucks will reach 81 billion cubic meters (BCM) by 2030 and be split between LNG and CNG. An additional 17 BCM in LNG demand is expected to come from ships by that same year. LNG demand in the truck and marine sectors is expected to account for 10% of all globally traded LNG at that time.
“At a time of abundant LNG supply in search of insufficient markets, this extra demand could be critical for mitigating oversupply,” says Rafael McDonald, the study’s project manager. “Companies will need to adapt their business models to take advantage of the market opportunity,”
The study examines the impact of lower oil and fuel prices on the adoption of natural gas. Utilizing a detailed analysis of IHS Automotive data of global truck fleets, it finds that lower oil prices may slow adoption in the short term but are unlikely to halt it. Much of the “launch pad for expansion,” such as critical infrastructure, is either in place or close to being so in key markets such as the U.S. and China, awaiting a rebound in diesel prices, the study notes. The report adds that China – the world leader in LNG vehicle adoption, with annual sales orders of magnitude higher than in any other market – will remain critical to continued growth.
Although the growth outlooks for natural gas demand in fuel are strong globally, the study does find big differences between drivers and outcomes in key regions. However, the report says that, in all regions, tax treatment of fuels will be critical in determining consumer choice, especially as oil prices fluctuate, and a minimum level of fueling infrastructure is essential to jumpstart adoption.
23 Comments on "Natural Gas Will Chop Away at Oil’s Dominance as Transportation Fuel"
Plantagenet on Thu, 4th Jun 2015 6:52 pm
The NG glut is a very interesting development. The NG glut developed several years before the oil glut. The low NG prices had begun to attract car makers and a few new ocean going vessels were built for NG, but this has slowed since the oil glut started.
The good news is that NG remains abundant. While the EIA is predicting a peak in US oil production in 2020, President Obama himself promised that the S has a century-long supply of NG to depend upon.
Plantagenet on Thu, 4th Jun 2015 6:52 pm
The good news is that NG remains abundant. While the EIA is predicting a peak in US oil production in 2020, President Obama himself promised that the US has a century-long supply of NG to depend upon.
CHeers!
Makati1 on Thu, 4th Jun 2015 7:19 pm
NGT is not an unbiased source of info on NG…lol. This is a sales pitch for another underwater (bankrupt) hydrocarbon ponzi scheme.
Perhaps the author does not realize the cost to build out a new system to refuel NG cars? Or the time line to do so. Or the timeline/cost to replace the billion cars on the road with NG fueled ones?
Of course he does! But he is paid to tell you that it is all possible and in your future. Maybe he is a relative of Plant?
mbnewtrain on Thu, 4th Jun 2015 7:51 pm
Three factors work against nat. gas as a land transportation fuel:
1. The thermal efficiency of burning NG in a vehicle is about the same as gasoline engine at 25%, while the thermal efficiency of a diesel engine is 32%, thus 25% better than NG engine.
2. The build out of infrastructure for large trucks and cars will take a decade or more and that cost will have to be added to the NG price.
3. Competing uses of NG such as for power generation will take precedence due to the thermal efficiency of 62% for NG combined cycle power plant versus coal fired power plant efficiency at 40%. Furthermore, burning NG will reduce CO2 emissions by 55% versus coal. So government policy to contain greenhouse gas emissions will emphasize NG use in power plants not truck and cars (reduction of GHG emissions of about 20% versus oil based fuel).
Also consider that three LNG plants are under construction for export of US nat. gas and several more are in the planning and permit stages. This will drive up the cost of NG, making it less competitive for transportation.
A few fleets of trucks used in local delivery will be converted to natural gas fuel, but IMO 95% to 98% of the over the road trucks will continue to use diesel fuel for the next 20 or 30 years. If trucking companies want to reduce cost/fuel consumption the trucks will be put on trains. Railroads continue to set records for number of trailers and containers hauled nearly every month for last four years. Trains haul a trailer using 30% to 40% of fuel compared to that of heavy trucks (40 ton gross).
Nony on Thu, 4th Jun 2015 8:24 pm
LNG for bunker fuel is already happening for ocean going vessels. Easier to justify modifying large engines. Infrastructure not the issue with land. Plus the new low sulfur rules make bunker a pain in the butt.
Nony on Thu, 4th Jun 2015 8:48 pm
Woot woot!
http://247wallst.com/energy-economy/2015/06/04/natural-gas-price-tumbles-on-huge-storage-increase/
Apneaman on Thu, 4th Jun 2015 11:16 pm
Canadian LNG prospects have ‘darkened,’ says International Energy Agency
http://business.financialpost.com/news/energy/canadian-lng-prospects-have-darkened-says-international-energy-agency?__lsa=null
Danlxyz on Fri, 5th Jun 2015 6:19 am
Our local school district just bought 120 new cng powered buses. It will save them $300,000. They run quieter and they don’t smell bad like diesel. It was a logical choice for them.
Davy on Fri, 5th Jun 2015 6:25 am
Dan, there is a niche for cng for sure but it will not scale to BAU and it is not a game changer. It will only make a difference on the individual or company level.
There are many such niche alternatives for the coming descent. We need thousands of them globally to adjust and mitigate the coming descent. What we don’t need is the hopium that this and other technologies will save us.
Danlxyz on Fri, 5th Jun 2015 6:57 am
Davy, you’re right. It isn’t a game changer but it is a choice for a lot of businesses that have local transportation needs. I think it would scale if the numbers make sense.
All of that diesel saved will still be used by someone else, though.
Davy on Fri, 5th Jun 2015 7:52 am
Dan, I wish cng would scale along with AltE but I am afraid it is too late. We do not have the time or the macro systematic wealth. Entropy is ahead of us and we are falling behind. I pray I am wrong and all will be well but I just can’t see any hope. Maybe we have 10 years of limping along. 10 years is a nice period to enjoy life if you are lucky enough to be enjoying life now.
Nony on Fri, 5th Jun 2015 8:00 am
It’s gonna be alright, Davy.
https://www.youtube.com/watch?v=gR9JMwzxybE
Davy on Fri, 5th Jun 2015 9:10 am
more like this alright NOo:
https://www.youtube.com/watch?v=7rZbvi6Tj6E
BobInget on Fri, 5th Jun 2015 10:36 am
Some natural gas requires dewatering and detoxification of a few poisonous nasties.
Otherwise NG, unlike crude oil requires no refining. From well-head to ‘gas tank’ in one go.
As for infrastructure. I’ll bet your city already has a network of natty pipelines. The story of gas lighting from so called Town Gas, made from coal, takes an entire chapter in quest for lighting.
Big Oil is fond of telling us “it will take years to build out infrastructure to deliver gas”. (when in point of fact, gasoline and diesel are still delivered by tanker trucks).
Hooking up to NG in most ‘gas stations’ would be as simple as hooking an existing low pressure
pipeline to a compressor and storage tank.
It’s true, gas pipelines do leak and explode in most inconvenient places. That’s because most are old and corroded. Liners or new pipelines
like decaying bridges need to be rebuilt and installed.
BobInget on Fri, 5th Jun 2015 10:43 am
Thanks Davy, for that link.
Makati1 on Fri, 5th Jun 2015 7:53 pm
BobInget, obviously you do not recognize the liabilities of such a gas hookup? Do you really think the 100,000+ gas stations are going to hire a new crew of minimum wage drones to fuel the vehicles? Or are you going to trust drunks, druggies, etc to do it like they do with gasoline, a much less explosive fuel? The insurance companies would love to add to the cost of NG usage.
Perhaps you do not realize that once you get away from those pipelines, there is none for long distances. Even in the city. Not to mention tearing up the streets to run connectors. It took decades for people to accept a gasoline tank under them, how long to do the same with a natural gas tank? Decades?
No, NG will never be the fuel of choice for the masses in their vehicles. Not to mention that the day of personal cars is about over for much of the world. The car bubble is being blown in the US at this moment with 7-8 year car payments! No-doc house loans with 40 years to pay. Desperation! LMAO
dashster on Sat, 6th Jun 2015 5:41 am
Post Carbon Institute report sees natural gas at the big fracking sites peaking next year and then going into terminal decline. The EIA sees those same sites peaking in 2020 and staying flat till 2040.
Predicting a 20 year plateau of natural gas from a site doesn’t seem right.
dashster on Sat, 6th Jun 2015 5:43 am
Obama and other politicians, businessmen and bureaucrats will say “almost a century of natural gas”. But it is 85 years – if, and only if – you are counting resources as well as reserves. If you just talk about natural gas reserves, then it comes down a bit – to about 12 or 13 years worth. And we are going to increase our population by 100 million in the next 50 years. And we want to use it for transportation and export it? Good luck with that.
Nony on Sat, 6th Jun 2015 6:09 am
http://www.achrnews.com/articles/129609-study-natural-gas-resources-are-plentiful
Peakers have been way, way, WAYYYYY wrong on their peak gas calls.
Kenz300 on Sat, 6th Jun 2015 9:35 am
Electric vehicles will increase in use every year as batteries continue to improve……..
Electricity will make major inroads into auto use while CNG and LNG will increase in use for large trucks.
GregT on Sat, 6th Jun 2015 12:35 pm
The American Society of Civil Engineers gave the American electric grid a grade of D+ in 2013. That grade is expected to fall by 2020. If climate change is to be addressed, fossil fuels must be removed as a source of electric power generation by some 80% by 2030, or in less than 15 years.
If we choose to address climate change, we will have much more pressing concerns to address other than transportation. If we choose not to address climate change, electricity will be of the least of our concerns.
Apneaman on Sat, 6th Jun 2015 2:25 pm
Greg, it’s just a conspiracy to get grant money.
Apneaman on Sat, 6th Jun 2015 2:35 pm
Nony there is no such thing as Nat Gas peakers. Your just making shit up and trying to connect it to peak oil. Not only are you irritating as hell, but your boring boring boring. Take the kaleidoscope away from your eyes and see the big picture. BTW most women do not want to endlessly hear about “guy stuff” – markets, money, industry, resources, etc, ad nauseum. They are more interested in people. Your welcome.