Natural gas infrastructure growth advances spark spiral for off-highway engines

  • 21-Oct-2013 11:33 EDT

Ricardo is helping the Canadian Railroad and other equipment makers assess the tradeoffs of locomotives that run on natural gas.

Stable pricing, low emissions, and fuel savings are prompting more engine manufacturers to develop natural gas engines. As more end equipment companies show interest in these engines, equipment makers are pressing forward with products that can help processors build an infrastructure for natural gas production and delivery.

Natural gas has seen somewhat limited usage in transportation, but that’s changing rapidly. Large vehicles in agriculture, construction, maritime, and rail are all being eyed as areas that may benefit by transitioning from diesel fuel to natural gas.

“Natural gas is not likely to have a big impact in passenger cars, but when you get into fleet vehicles and large equipment, the market is not going to go away,” said Kenneth Medlock III, Senior Director of the Baker Institute at Rice University.

Medlock was among a number of presenters at the High Horsepower Summit in Chicago in September who highlighted the benefits of natural gas in transportation. They noted that the U.S. has a large volume of this natural resource, and mining techniques continue to make it more cost effective to get the fuel out to customers. Users are also finding that the benefits can be substantial, especially in large equipment.

“In rail applications, you can get up to 50% fuel savings with liquid natural gas and see a 30% or greater reduction in NOx and particulate matter emissions,” said Lorenzo Simonelli, President and CEO of GE Transportation. “We believe in a few years, the industry will see locomotives with natural gas tender cars.”

Interest is increasing rapidly in the off-highway market. Natural gas announcements have been made by engine makers including Caterpillar, which sponsored the conference. Third party service providers are also seeing heightened interest.

“Over the last three years, we’ve probably started three to four times the number of natural gas projects than we’d been doing,” said Mark Kuhn, Principal at Ricardo Strategic Consulting. “The projects started in power generation, but now much of the interest is in engines. In off-highway vehicles, most people are going with liquid natural gas because it has four times more density than compressed natural gas.”

The adoption of natural gas will require the development of an infrastructure for producing natural gas and making it as widely available as diesel fuel. That will take a while, but it’s not an insurmountable hurdle. Many suppliers have developed engines that use either diesel or natural gas, or a blend of each.

“Dual-fuel systems give you the most flexibility, you have fuel injection systems for standard diesel and for natural gas,” Kuhn said. “You can get them in either aftermarket bolt-on packages or factory-installed.”

Growing demand is fueling a building boom for processing and distribution facilities. Many suppliers feel that supply and demand will both be on an upward spiral in coming years, with advances in one side of the supply chain driving more development in the other.

“More supply leads to more demand,” said Jeff Sipes, Vice President & General Manager, Chart Energy & Chemicals, which makes equipment for processing plants. “We’re in the early stages of a multi-plant expansion.”

Medlock predicts that natural gas pricing will remain stable for years. Increased availability will occur before demand increases, so there shortages that drive up prices will be more bottlenecks than long-term factors. The U.S.’s large supplies will largely be used in North America.

“There aren’t really any exports from North America, but even any additional demand from exports won’t cause prices to rise,” Medlock said. “The U.S. will remain a low-cost supplier of natural gas.”

While speakers throughout the supply chain are optimistic, they noted that construction of new plants is often held up by regulations. But there has been improvement. Today’s environment provides a sharp contrast compared to the 1970s, when regulators banned the construction of new natural gas plants because they thought America’s gas supplies would run out, Medlock said. However, he noted that getting approval to start construction can take longer than building these large facilities.

“Permitting is a big issue,” said Joseph Pak, Director of Sales and Marketing at Cosmodyne. “It takes 18-24 months to build a turnkey project once you start construction, but the actual timeline can be around 36 to 45 months.”

That stumbling block isn’t likely to slow the growth of natural gas for many large vehicles.

“It’s no longer a question of ‘if’ companies will make the transition, but 'when,' and how quickly,” Kuhn said. “Over the next 10 years, the prices are projected to be very predictable, they’re decoupled from oil prices. That means companies can make long-term plans to convert their fleets.”

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