Americas News
Diesel-LNG Price Spread Driving Conversions
With production of natural gas in North America outpacing demand for liquefied natural gas (LNG) from small-scale plants, Todd Thurlow, vice president of consultancy Pace Global said the market for bunkers and other transportation fuels will drive the industry, news site Natural Gas Intel reports.
"The fundamental driver for using natural gas as a nontraditional transportation fuel is the price spread between diesel and natural gas," he said.
"The spread likely will remain through 2025, with gas under $6.00/Mcf in North America."
Thurlow said the difference in prices is "sufficient to drive the conversion of diesel into LNGÂ products," while emissions rules incentivise us of LNG in the marine sector.
"LNG and ultra-low sulfur diesel are the two primary fuels capable of meeting the most stringent sulfur reduction standards," he said.
"Noncompliance is not an option for ship owners; they are evaluating fuel-switching and other options.
"LNG conversion in many cases has the strongest and best economics."
Thurlow said the production of LNG in small-scale facilities is likely to grow in the long term, but its economics are in doubt in the immediate future
He cited the example of Shell, which has pulled back from several liquefaction projects in the U.S. and Canada this year.
