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North America May Soon Be Running On Natural Gas

An abundance of cheap natural gas has industry players the continent over clamouring to advertise the fuel’s use for anything from power generation and home heating to the latest craze – transportation. North America may soon be running on natural gas.

It used to be that natural gas producers holding onto a limited supply of coveted product didn’t need to spend time and money on marketing.

But with a recent push by energy firms to furiously tap vast shale deposits across North America for the fossil fuel, those days are over.

An abundance of cheap natural gas has industry players the continent over clamouring to advertise the fuel’s use for anything from power generation and home heating to the latest craze – transportation.

Espousing the virtues of the cleaner-burning fuel – which produces one-fifth less carbon dioxide than diesel when burned in the engines of heavy trucks, according to Shell Canada – the Canadian arm of Royal Dutch Shell PLC revealed this week its big plans to develop infrastructure and promote liquefied natural gas for transportation.

Shell Canada is the most recent to get in the game, joining Encana Corp., Talisman Energy Inc. and other competitors in doing its part to get North America running on natural gas.

The Dutch energy giant’s Calgary subsidiary is spearheading the effort by the global firm by promising to supply heavy-duty trucks starting next year with liquefied natural gas (LNG) at its Shell Flying J truckstops across Alberta.

At first, the firm will source LNG from a third party while it builds a liquefaction facility to cool gas into a liquid that can power trucks, at its Jumping Pound gas processing facility about 30 kilometres west of Calgary – to be ready by 2013.

Shell won’t reveal how much it intends to spend on the effort or its broader push to develop new markets for LNG in transportation, including partnerships announced this week with marine transportation company Wartsila North America, gas-powered engine manufacturer Westport Innovations, General Electric’s transportation division and its plans to develop LNG solutions for the mining industry.

“Globally, Shell has been in the LNG business for about 45 years,” says Bob Taylor, Shell Canada manager for commercial fuels, business development and marketing.

“Over the past couple of years we’ve looked at how we can produce LNG in smaller units for things like this, which are really inland applications and transport.”

Taylor couldn’t offer up how much it would cost trucking companies to refuel but Encana, which is working on a similar project, gave its take.

Eric Marsh, executive vice-president of Canada’s top natural gas producer, said depending on the location in North America, LNG for trucks could be 25 to 40 per cent cheaper than diesel and truck companies could pay off the larger price tag of the vehicles in one to four years.

“The fuel savings pays off that additional expense,” Marsh said.

Encana is building its own liquefaction facility in Strathmore, AB, and hopes to have it done later this year, he noted, pointing to existing projects to build LNG gas stations to fuel trucks operating in the Haynesville shale play in the southern United States with Atlanta Gas and Light committing to supply the product long term – and a potential future plant between Texas and Louisiana.

Encana has 15 drill rigs in Canada running on natural gas, there are other efforts underway to have LNG trucks built for and supplied by Encana as well as compressed natural gas (CNG) projects, including the company’s plan to have all its vehicles run on CNG, targeting 200 by the end of 2011….

“I think this is a reflection of the fact that we have, now, more natural gas than we know what to do with,” Currie said, noting his view “big” infrastructure investment will have to be made before the average car on the road runs on gas.

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