eNews • November 1, 2013
Promoting a Cost-Effective, Reliable and Competitive Transportation System

LNG powered trains could arrive by 2017: Kemp

LNG-powered locomotives could be in widespread use on North American railroads as early as 2016 or 2017, according to Railway Age, one of the industry's leading technical publications - which is far sooner than most energy analysts expect.

Burlington Northern Santa Fe (BNSF) railroad, owned by Warren Buffett's Berkshire Hathaway, made headlines earlier this year when it announced it would begin experimenting with an LNG-fuelled locomotive and might in future switch a large proportion of its train fleet from diesel to cleaner-burning and cheaper natural gas.

In 2011, the railroads consumed just over 3 billion gallons of distillate fuel oil, almost 5.5 percent of the total diesel consumption in the United States.

Oil analysts have been openly sceptical about how far and how quickly natural gas could displace diesel as a transportation fuel.

The cost of retrofitting compression engines to run on a mix of natural gas and diesel, and the need to build an extensive refuelling infrastructure, are a major barrier, especially when no one can be certain how long gas prices will remain at the current low level.

Fuel accounts for around 30 percent of operating expenses on the major Class 1 railroads, roughly as much as they spend on compensation and other benefits, and far larger than any other operating cost. BNSF spends more than $1 billion every three months buying fuel, according to the company's quarterly performance report.

Switching to LNG could generate savings of up to $200,000 per year per locomotive, and slash the total fuel bill, but each LNG fuel tender could cost around $1 million, so the railroads would have to trade off lower operating costs against higher capital charges.

Switching to LNG would be a major investment decision and bet that the price of gas will remain much lower than oil for the next decade.


The rail industry may, however, be closer to making the switch than many oil analysts realise. "Test programmes at BNSF and Union Pacific are expected to start in the fourth quarter," according to Railway Age. The Association of American Railroads (AAR) and its Transportation Technology Center are already developing technical specifications for an industry-standard LNG fuel tender, Railway Age reported last month ("Experts weigh in on LNG", Sept. 6).

The AAR Natural Gas Fuel Tender Technical Advisory Group is working to address safety and regulatory issues. At the moment U.S. federal regulations do not allow LNG to be carried by rail. The AAR taskforce is now working with the Federal Railroad Administration to develop safety standards.

The first locomotives are likely to burn a dual-fuel mix of 80 percent LNG and 20 percent diesel. It would not require major engine modifications and the engine could switch back to burning 100 percent diesel if LNG was not available or there was a technical fault with the LNG system.

The proportion of LNG could be pushed as high as 95 percent but only with engine modifications that would render it difficult to switch back to pure diesel burning.

According to Railway Age, one of the major strategic decisions is whether to carry the LNG fuel in a 10,000-gallon ISO tank or a 25,000-gallon tender. ISO tanks would provide more limited range, but could be loaded already filled onto an ordinary intermodal railcar, making refuelling easier.

Tenders would provide greater range but take 30-45 minutes to fill. Nonetheless, a train using 25,000-gallon tenders should be able to travel from Los Angeles to Chicago without refuelling along the route. Unit coal trains, which make long, unbroken journeys with a single cargo, are the most likely to use LNG initially, Railway Age predicted. BNSF experimented with LNG-powered trains in the 1980s and 1990s, and the first tests this time are likely to employ modernised tenders that were originally built for those earlier runs.


If the gap between gas and oil prices remains wide, gas could seize a significant share of the transport market as early as the end of the decade. LNG and other forms of natural gas are already making inroads into the market for high-horsepower engines.

Oilfield operators are increasingly using heavy-duty dual-fuel engines for drilling and pressure pumping to cut the costs of each well and boost returns. Schlumberger, Halliburton and Baker Hughes all now boast about their ability to supply dual-fuel engines for contract work. LNG or compressed natural gas is now used in most new vehicles ordered by mass transit operators and waste collection firms in the United States. Major road transport companies are starting to roll out LNG-fuelled trucks on selected routes.

At sea, many of the major oceangoing LNG transporters use boil-off gas to fuel their engines, and other LNG-fuelled vessels are being built. Shell, which is as much a gas company as an oil one, is making a strategic effort to support the broader take-up of LNG in the transport system. Like other systems with large sunk costs and expensive infrastructure, it will be hard to dislodge diesel from its dominant position in heavy transportation.

But the technical work now under way on the railways and in other forms of transportation implies the system may be nearing a tipping point. If the price gap between oil and gas remains, widespread switching appears inevitable and could be apparent within the next five years.

Source: Reuters

The Soy Transportation Coalition is comprised of thirteen state soybean boards, the American Soybean Association, and the United Soybean Board. The National Grain and Feed Association and the National Oilseed Processors Association serve as ex-officio members of the organization.

Soy Transportation Coalition
1255 SW Prairie Trail Pkwy., Ankeny, Iowa 50023
Phone: (515) 727-0665 Fax (515) 251-8657
Email msteenhoek@soytransportation.org
Web www.soytransportation.org

Funded by the Soybean Checkoff