A new Tenaska marketing and development affiliate, Tenaska NG Fuels LLC, is well-positioned to help Rocky Mountain natural gas producers capture developing marine and railroad locomotive markets, Doug Clark, its vice president, said Thursday in an interview.
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"The high-horsepower market is a burgeoning market for Rockies gas," Clark said. "There are mining operations all over that part of the country and there are marine operations all around the coasts and we stand ready to help those producers market their gas to those markets."
Prompted by the lower price and emissions of gas, mining companies are starting to explore the use of liquefied natural gas or compressed natural gas to power their equipment, he said. "The close proximity of mining operations that rely on high-horsepower equipment in mining operations will be a boost to gas producers in that area."
Tenaska said Thursday it created the company to promote the use of LNG and CNG to industries using high-horsepower engines as well as other vehicles.
Omaha, Nebraska-based Tenaska said the new affiliate will help customers manage commodity risk, build commercial arrangements and strategically site, develop and finance production and distribution facilities. It will build on Tenaska's energy-marketing expertise and its 26 years of project development and commercial financing, Tenaska said.
Clark, who also is chairman of National Gas Vehicles of America and a former president of the Metropolitan Utilities District in Omaha, said the "proliferation of shale gas production in the United States has made the use of natural gas as a transportation fuel very attractive, compared to the traditional diesel fuel used in many types of engines."
As MUD president, Clark oversaw the conversion of a fleet of 200 vehicles from gasoline and diesel fuel to CNG and the development of the infrastructure required to support it, including several public fueling stations. MUD sales of CNG are on track to total the equivalent of 400,000 gallons in 2013, Tenaska said in a statement.
Clark also said he expects railroad companies will use LNG to fuel many of their locomotives in the near future. Citing tests undertaken by Burlington Northern and other railroad companies, Clark said, "they are looking into the future, and they see how they can mitigate costs and emissions by using LNG."
The creation of Tenaska's latest affiliate comes just as interest is growing in gas fueling a variety of high-horsepower engines.
Four companies -- Clean Energy Fuels, Ferus Natural Gas Fuels, GE Ventures and GE Energy Financial Services -- said in September they have formed a consortium, Eagle LNG Partners, that will develop regional projects to supply LNG to longhaul trucking, rail, mining, marine and oil and gas services customers in the US.
The group said it is focusing on projects in Florida, Washington, Colorado, North Dakota, Ohio and Texas that would build upon existing Clean Energy and Ferus plants and operations, as well as previously announced Clean Energy-GE LNG projects in the Northeast and Midwest expected to be operational in late 2015.
Paul Blomerus, senior director of high horsepower for Westport Innovations, said in an interview back in September the use of LNG in the non-automotive transport sector in North America is negligible, but "individual vehicle fuel consumption in these markets can be substantial."
Beth Reese, president of Nicor Gas, told a conference back in September that the transportation sector is an avenue for "top-line growth" in gas demand, although she sees CNG as a "clear winner" over LNG, as consumers seek alternative-fueled, non-electric vehicles.
Last year, the US Energy Information Administration said NGVs accounted for 0.36% of overall gas demand in the US. The agency isn't forecasting much of a rise over the next decade, but others are more bullish on the sector. American Clean Skies Foundation, which backs the increased use of gas in transportation, said in a report earlier this year that NGVs will consume 711 Bcf in 2025, or more than 2% of anticipated gas demand for that year, from just 57 Bcf in 2013.