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LNG to play increasing role as freight locomotive fuel

Hydrocarbon Engineering,

According to the US Energy Information Administration (EIA), growth in domestic natural gas production and substantially lower natural gas prices compared to crude oil prices could result in significant cost saving that use LNG as a fuel source. For this reason they have projected that LNG will play an increasing role in powering freight locomotives in years to come.

The seven US freight railroads are considering using LNG in locomotives because of the potential for significant fuel cost saving and the resulting reductions in operating costs.

As it stands, these railroads consumed more than 3.6 billion gal. of diesel fuel in 2012, 7% of all diesel fuel consumed in the US. This was equivalent to a fuel cost of more than US$ 11 billion and accounted for 23% of total operating expenses.

Given the estimated price difference between LNG and diesel fuel, future fuel savings are expected to more than offset the approximately US$ 1 million incremental cost associated with an LNG locomotive and its tender.

The EIA’s Annual Energy Outlook 2014 includes two alternative cases (the High and Low Rail LNG cases) that examine the potential effect of LNG in freight rail:

  • In the reference case, LNG fuel use increases from just over 1 trillion Btu to 148 trillion Btu in 2040, or 35% of total freight rail energy consumption.
  • In the High Rail LNG case, LNG fuel consumption increases 392 trillion Btu in 2040, or 95% of freight rail energy consumption.
  • In the Low Rail LNG case, LNG consumption increases to 64 trillion Btu, or 16% of total freight rail energy consumption.

It has been found that even under the High Rail LNG case, overall demand for natural gas as a result of a switch to LNG would increase overall demand for natural gas by less than 1%, resulting in a minimal effect on natural gas prices.

Adapted from press release by Claira Lloyd

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