By TOM FOWLER
Shell will build plants in Louisiana and Canada to produce liquefied natural gas as a fuel for heavy trucks and large ships, the company said Tuesday.
The LNG terminals are among the latest efforts by energy companies to create greater demand for what is now a glut of natural gas in North America.
Shell, one of the largest gas producers in the US, will build the facilities in Geismar, Louisiana, along the Mississippi River south of Baton Rouge, and in Sarnia, Ontario, on the southern shore of Lake Huron just east of Michigan.
Each plant will be able to produce 250,000 tpy of LNG by chilling natural gas to negative 260 degrees so it can be compressed into a liquid and stored in high-pressure insulated tanks.
The facilities will be relatively small compared with other natural gas liquefaction terminals around the world, such as those in Qatar, but they will represent a doubling of the liquefied-gas manufacturing capacity in the US and Canada, said James Burns, Shell's general manager for LNG fuels in the Americas.
Natural gas is used as a transportation fuel in some parts of the world, mostly for fleets of vehicles like buses and garbage trucks which use centralized refueling stations. Compressed natural gas is more widely used than LNG, but LNG has proven to be effective for very large trucks that drive great distances.
Few ships now run on LNG, according to The Lloyd's Register Group. But the fleet is expected to grow because of increasing environmental restrictions in the most polluted ports and the improving cost competitiveness of LNG compared with oil.
A Great Lakes cargo-ship operator has signed on as a future LNG customer, Mr. Burns said. Shell is also planning to operate three supply vessels in the Gulf of Mexico that will run on LNG, and it is in the process of converting some of its land-based drilling rigs to run on the fuel, rather than diesel.
The facilities are expected to take about three years to complete. Shell would not disclose the cost of the projects.
Dow Jones Newswires