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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2011

Vol. 16, No. 4 Week of January 23, 2011

Moving from gasoline to gas

Canadian alliance makes case for using natural gas to fuel medium- to heavy-duty vehicles; calls for temporary government help

Gary Park

For Petroleum News

A multi-stakeholder study has given an added lift to those who believe natural gas can provide a cleaner transportation fuel and help reduce the North American gas glut.

A Canadian coalition drawn from government, industry, environmental organizations and universities has agreed, after less than a year of pondering the issue, that converting gas to transportation fuel could improve the competitiveness of medium- and heavy-duty vehicle fleets.

The Canadian Natural Gas Vehicle Alliance, whose work was facilitated by Natural Resources Canada, has no doubt that gas “can provide clean, cost-effective transportation solutions which will benefit all Canadians.”

The report said that trucking fleets that operate along regional highway corridors and in urban areas can make competitive and environmental gains.

The Canadian Gas Association, a participant in the study, estimated that using gas as a fuel source could reduce lifecycle greenhouse gas emissions from heavy trucks and buses by 20 to 25 percent compared to diesel trucks and buses.

It also suggested natural gas vehicles could operate on renewable gas produced from landfills, digesters and wastewater treatment plants, where lifecycle GHG benefits could be even greater.

Second-largest sector

The report estimated that transportation accounted for 29 percent of Canada’s secondary energy use in 2007, making it the second-largest sector in terms of energy consumption.

Energy demand for transportation is rising and vehicle energy use is projected to increase by 31 percent over the 2004-20 period, adding to GHG emissions that grew by one-third in the 1990-2008 period.

However, the report said temporary government fiscal measures would be needed to overcome barriers such as the upfront capital cost of manufacturing vehicles and the risks associated with operation costs.

Coordinated investments would also be needed to provide key corridor infrastructure such as private onsite refueling stations and liability issues.

In addition, the report urged an education and outreach strategy, including a central website for target audiences and a local support network.

Finally, the alliance called for continued study of natural gas use in other transportation applications.

Government commitment required

Gary Leach, executive director of the Small Explorers and Producers Association of Canada, said the next steps require a commitment by Canada’s federal and provincial governments to advance the expanded use of natural gas in the transportation sector, noting Alberta is already taking early steps to identify what needs to be done.

He said the growing evidence that shale gas has created a new era of abundant supply should overcome any lingering suspicion that there are not sufficient supplies at a competitive price.

Leach said it is also clear that if gas producers in Western Canada face a competitive disadvantage because of surplus supplies in the United States, there is hope that the oil sands and NGVs could provide attractive options.

A spokeswoman for Encana, which is North America’s second largest gas producer and has been lobbying North American lawmakers to accept the notion of gas as a transportation fuel, said it is important to demonstrate there is a “a commonsense, made-in Canada energy solution for the future (that) costs, on average, one-third less than conventional gasoline at the pump.”

The building momentum coincides with the pre-Christmas announcement by Talisman and Sasol of a joint-venture to develop Talisman’s considerable shale gas deposits in British Columbia’s Montney basin and tie that in with the prospect of building a GTL plant to upgrade the gas into fuel.






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