CALGARY - Royal Dutch Shell PLC is planning two small-scale projects that will provide cheap and abundant natural gas, in liquid form, to trucks and ships in the Great Lakes and Gulf Coast regions.
The plants in Sarnia, Ont., and Geismar, La., will each produce 250,000 tonnes of LNG — natural gas that has been chilled into a liquid state — per year.
In 2011, Shell announced a similar undertaking in Alberta.
Advances in drilling techniques have unlocked huge supplies of natural gas from shales across North America, leading to a glut that has depressed prices of that commodity for years.
Using the gas as a transportation fuel is one way to sop up some of that excess supply, as well as cut greenhouse gas emissions, since natural gas is relatively clean-burning compared to oil-derived fuels.
But configuring vehicles to run on LNG and installing fuelling infrastructure takes a lot of upfront investment. Introducing natural gas to fleet vehicles such as buses and trucks is seen as a first step.
"Natural gas is an abundant and cleaner-burning energy source in North America, and Shell is leveraging its LNG expertise and integrated strength to make LNG a viable fuel option for the commercial market," said Shell Oil Company president Marvin Odum.
"We are investing now in the infrastructure that will allow us to bring this innovative and cost-competitive fuel to our customers."
In the Great Lakes, the Interlake Steamship Company is expected to be Shell's first marine customer as it converts its vessels to run on LNG. Shell will supply the fuel to U.S. and Canadian markets that border all five Great Lakes as well as the St. Lawrence Seaway.
Shell's facility in Louisiana will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to onshore and offshore oil and gas operations in the Gulf of Mexico.
Shell is also planning to use LNG in its own operations.
It did not say how much it expects the Sarnia and Geismar plants to cost.