By John Kemp
LONDON Nov 4 In the decade to 2013, shale gas
and oil transformed the U.S. and global energy markets. The next
revolutionary development over the decade to 2023 is likely to
be the widespread use of gas as a transport fuel, starting in
the United States.
Freight trucks powered by liquefied natural gas (LNG) rather
than diesel could become a common sight on the U.S. interstate
highway system under plans being developed and financed by Royal
Shell has reached an agreement with TravelCenters of America
, a major truck stop operator, to run two LNG fuelling
lanes at up to 100 of its sites along the interstates.
Shell will fund the construction of fuelling lanes and
associated storage capacity and supply the fuel, assuming most
of the financial risk associated with the venture.
In exchange, the oil and gas major gets access to prime
fuelling locations along the most heavily used trucking routes
to help realise its vision of making LNG a transport fuel.
Switching the trucking fleet from diesel to natural gas
could produce substantial cost savings and reductions in
One barrier is the high upfront costs of new LNG or
dual-fuel engines. But some of the larger fleet operators are
already converting trucks to LNG to take advantage of lower
The bigger barrier has been lack of convenient fuel
"Natural gas retail refuelling infrastructure is in
early-stage development and will require major expansion and
investment," according to a report published last year by the
National Petroleum Council, the industry committee that advises
the U.S. Department of Energy.
"The transition to a fully scaled and mature retail
infrastructure system ... will take time and investment" it went
on. ("Advancing Technology for America's Transportation" 2012)
Shell's partnership with TA is likely to solve the
refuelling problem and herald the next big shake-up in the oil
and gas markets after the shale revolution.
Most existing LNG filling stations are owned by the
operators of transit buses and waste collection vehicles. There
are currently just 42 refuelling stations dispensing LNG open to
the public, according to the U.S. Department of Energy's
Alternative Fuels Data Center (Map 1).
It should be possible to fuel a significant part of the
trucking market from a relatively small number of stations
placed in strategic locations.
The vast majority of long-distance road freight moves along
the interstate highway system, according to an analysis by the
National Renewable Energy Laboratory in 2007 (Map 2).
With LNG stations on or close to the interstate network,
hauliers could be guaranteed reliable and convenient access to
fuel for long-distance routes.
For Shell, the advantage of a strategic partnership with TA
is the company's network of 244 refuelling stops along the
interstates (Map 3).
Many existing LNG stations are already clustered along two
routes: interstate 15 (I-15) between San Diego and Los Angeles
in California to Salt Lake City and Tremonton in Utah and I-84
between Portland, Oregon, Boise, Idaho and Tremonton.
In the United States, it is common for major logistics
companies and retailers to practice a "four corners"
distribution strategy. Manufactured items, whether produced
domestically or imported, are first sent to a transloading
centre in one of the four corners of the United States before
being dispatched to a final destination.
Four corners facilities are usually established in the
Pacific Southwest (California), Pacific Northwest
(Washington/Oregon), Northeast (New Jersey/Pennsylvania/Ohio)
and Southeast (Georgia).
Stations placed on the main freight corridors leading to and
from these transloading centres would be able to capture a large
share of the fuel market. Both I-15 and I-84 serve the
four-corners system. TA has many other prime locations.
Establishing up to 100 refuelling stations along the
interstates would be enough to serve a significant share of the
For a company the size of Shell, the investment is modest
but could bring enormous rewards. Shell's production was split
50:50 between oil and gas in 2012, and it is keen to monetise
its gas reserves by developing new uses for them in the
higher-value transportation market.
"Shell has been working to develop the LNG for Transport
market globally," the company said in a press release in April.
Shell has the financial muscle to help overcome the
technological inertia that would otherwise hamper switching from
one fuel system (diesel) to another (natural gas).
North of the border, Shell has started selling LNG to
trucking firms via selected Flying J fuelling stations in
Canada's oil-and-gas rich province of Alberta.
Shell and TA have pledged a "phased approach" to rolling out
their network of LNG fuelling lines, subject to customer demand.
On Oct. 31, Chart Industries, a major supplier of
gas storage, transportation and dispensing equipment announced
it had secured a contract to "build and commission 20 retail
natural gas fuelling stations across North America" from an
unidentified "major oil company".
All 20 fuelling stations are due to be completed and in
service by mid-2015, Chart revealed. That one order alone will
increase the number of fuelling stops with LNG available by 50
If Shell's planned network of 100 stations is built, it
would cover almost all the major freight routes in the United
States, essentially eliminating the biggest obstacle to
widespread use of LNG as a road fuel (Map 4).
If gas prices remain competitive compared with diesel, the
infrastructure for widespread switching could be in place as
early as 2016.