Shell to make LNG available as marine fuel, starting in U.S. Gulf market

Shell has revealed plans to make Liquefied Natural Gas (LNG) available as a transportation fuel in a number of key markets. It is actively developing new business opportunities with Original Equipment Manufacturers (OEMs) to substitute LNG for diesel and propane in a number of industrial sectors including marine and oil and gas drilling applications.

Today Shell reported it has reached a Joint Cooperation Agreement with Wartsila North America to further improve the environmental footprint of the U.S. marine industry, as well as other sectors, by accelerating the deployment of larger engines which use LNG as a fuel. Shell will provide low-cost and low emissions LNG fuel to a broad range of operators of Wartsila natural gas powered vessel  and other customers. Under the agreement, the partners will focus first on the U.S. Gulf Coast, and then expand their efforts.

One Gulf Coast operator that has already announced that it will build LNG fueled OSV’s is New Orleans headquartered Harvey Gulf International Marine (see earlier story).

Shell also said it has reached a Cooperation Agreement with GE’s transportation division to jointly develop a total solution for railroad including associated infrastructure and a locomotive capable of running on both diesel and LNG.

Plans for the trucking industry will see Shell make LNG available at select Shell Flying J truck stops in Alberta, Canada, for heavy-duty fleet customers beginning in 2012. Shell is pursuing engineering and regulatory permits to produce LNG by 2013 at its Jumping Pound gas processing facility in the foothills of Alberta, Canada.  Pending regulatory approval, it will be the first investment of its kind for Shell globally and will include production facilities and downstream infrastructure.  Until then, LNG will be supplied to the Shell Flying J truck stops from third-party supply agreements.

“With an abundance of natural gas and a growing need for low-emission transportation fuels, today signals a very important step for a significant North American resource,” said Marvin Odum, president, Shell Oil Company. “Our strong portfolio and worldwide LNG leadership puts us in a unique position to grow LNG in key markets.  And, to meet growing demand, natural gas for larger fleet vehicles delivers reduced emissions and offers a cost-competitive alternative to other fuels.”

“As global demand for transportation fuels increases, including for LNG, Shell is well positioned to meet this demand. LNG can provide great advantages for our commercial customers as a future energy solution in transportation.  LNG will be a welcome addition to Shell’s portfolio of quality transportation fuels,” said Mr. Odum. 

Read Wartsila’s comment on its agreement with Shell HERE

September 7, 2011