Moving to establish itself as the leading U.S. provider of cutting edge fuel for trucks, trains and vessels, Royal Dutch Shell will announce plans Tuesday for two new plants it says will double the nation’s supply of liquefied natural gas.
The oil giant’s planned facilities in Louisiana and the Canadian province of Ontario will liquefy and supply natural gas to truck stops, railroads and waterways, according to materials reviewed in advance by the Houston Chronicle.
Shell did not disclose the cost of the projects, but said the effort is aimed at advancing the use of natural gas and becoming a dominant force in the emerging transportation market. Natural gas must be compressed or liquefied to be practical in mobile fuel tanks.
“We see LNG as tomorrow’s fuel available today and we want to be seen and act as the leader in this space,” said James Burns, Shell’s general manager overseeing its liquefied natural gas for transportation business.
Although few vehicles now run on natural gas, Shell expects its fuel to provide a 30 percent savings on energy costs for long-haul trucks and other heavy diesel users, Burns said.
“Our customers are asking for it,” Burns said. “We’ve sold diesel to these folks and for various reasons they are looking at natural gas as a fuel and we want to be the fuel provider for them.”
Shell plans to build what it calls small-scale plants to liquefy natural gas, each taking up about 10 acres and producing about 400,000 gallons daily, Burns said.
One of the new plants will be located in Geismar, La., adjacent to a Shell chemical plant. Another will serve the U.S. from a site on Lake Huron in Sarnia, Ontario, located along the Michigan border, he said.
Shell previously announced another plant of similar size and capacity meant mainly to serve Canadian markets from its location west of Calgary, Alberta.
Each site will have large cold storage tanks for the fuel, which will keep its temperature at minus 256 degrees Fahrenheit.
The Gulf Coast site in Geismar will be able to supply liquefied natural gas along the Mississippi River, the Intra-Coastal Waterway and to offshore oil and gas facilities in the Gulf of Mexico.
It will produce liquefied natural gas that can be used at truck refueling stations and in oil fields, where it could run drilling rigs and large engines that burn through millions of gallons of diesel.
According to data from Calgary-based oil and gas producer Encana Corp., the industry consumes more than 1.2 billion gallons of diesel annually just for hydraulic fracturing — injecting water, sand and chemicals under pressure into oil and gas formations to free the hydrocarbons.
Read more: Canadian plant to feed engines with LNG
Rising diesel costs have piqued interest in natural gas among users of the world’s largest and most fuel-thirsty engines. But limited refueling infrastructure and lack of natural gas engines present major obstacles to its widespread use as fuel.
Shell is coordinating with engine and vehicle manufacturers, as well as with consumers, to help usher in greater use of the fuel that it hopes to provide, Burns said. “You always hear this chicken-and-egg discussion whenever people talk about this industry, so we’re working on both sides of this equation,” he said.