Natural Gas Becoming the World's Shipping Fuel of Choice

Gas Burner

By Sam Eifling

February 13, 2014

The world's transport is increasingly run on liquefied natural gas as falling LNG prices and environmental regulations prompt the worlds shipping companies to switch from oil.

Reuters reports that while LNG prices are still relatively high in Europe and Asia, companies and nations are investing in LNG infrastructure in the expectation that prices will fall through the decade as LNG production increases.

Globally, demand for LNG in transportation could increase more than 30 fold from about 5 billion cubic metres (bcm) in 2012 to more than 160bcm by 2030. That's according to energy consultancy Wood Mackenzie, whose head of research, Noel Tomnay, told Reuters that LNG prices and emissions restrictions are driving the shift.

Germany is building LNG bunker terminals in Hamburg and Bremerhaven; the Dutch are outfitting the harbor in Antwerp and the import terminal in Rotterdam; Singapore is investing in LNG bunkering in anticipation of high demand from China.

In the United States, where shale discoveries and breakthroughs in mining techniques have glutted the market with LNG, the price of the gas has fallen by half since 2008. Shipping lines are taking advantage by building fueling stations for fleets; over-land trucks, and railroads may follow suit.

While LNG does burn more cleanly than petroleum, it still generates emissions. The U.S. Energy Information Administration has found that emissions from LNG have jumped by nearly one-sixth since 2005 as the United States edges away from coal and petroleum. The good news: on balance, total fossil fuel emissions are down 10 percent over that period.

By increasing production of petroleum and natural gas, the United States is projected to become a net exporterof natural gas by 2018, while India, China and Europe crank up their own gas imports in the same period. Canada remains one of the few major producers in the world — Russia and the Middle East are the others — to stand as a net exporter of both petroleum and natural gas.