* Caterpillar will fund the development
* Commercial production to start in five years
By Shounak Dasgupta
June 5 Caterpillar Inc and Westport
Innovations Inc will develop engines that can
use cheaper natural gas instead of diesel to power mining trucks
Natgas prices have fallen to levels of $2 per million
British thermal units from about $10 in 2008 as surging output
from shale fields has flooded the market.
U.S. diesel prices have changed little over the last one
year, costing about $3.9 per gallon at the end of May.
"Many of our customers are asking for natural gas-powered
equipment in order to reap the financial and environmental
benefits," Steve Fisher, a vice president at Caterpillar, said
in a statement.
Shares of Westport, which has already tied up with General
Motors Co and Cummins Inc to develop natural
gas-powered engines, rose more than 21 percent Tuesday on the
Toronto Stock Exchange and on the Nasdaq .
Caterpillar and Westport will also develop technology to use
the fuel in Caterpillar's engines employed for applications such
as electric power, industrial, machine, marine and petroleum.
Caterpillar, the world's largest maker of earth-moving
equipment, will fund the development of the engines, the
companies said in a statement. Commercial production is expected
to start in about five years.
Many oil and gas producers are also moving away from diesel
to power their drilling rigs.
U.S. company Apache Corp is converting its first rig
to run on liquefied natural gas, while about 15 of Encana Corp's
more than 40 rigs are driven by gas.
Despite the rising preference for natgas to power engines,
Westport's shares have fallen nearly a fourth in the last six
Stifel Nicolaus analyst Jeff Osborne said investors feared
that companies such as Navistar, Cummins and others will
introduce competitive products without relying on Westport's
technology over time.
Westport shares rose to a high of C$28.12 on Tuesday. Its
U.S.-listed shares jumped to $27.15.