US efforts to boost natgas in transportation face challenges

14 May 2013 18:40  [Source: ICIS news]

WASHINGTON (ICIS)--Efforts to promote wider use of natural gas face technical, infrastructure and cost issues that challenge prospects for a rapid and wholesale increase in gas consumption, a leading Senate energy authority said on Tuesday.

Senator Ron Wyden (Democrat-Oregon), chairman of the Senate Energy and Natural Resources Committee, told a hearing on natural gas use potential that a number of difficult questions could “throw a monkey wrench into the American engine of potential progress” that abundant new supplies of shale gas could enable.

In the first of what will be three broad-based hearings to be held this month on wider potential use of shale gas, Wyden noted that “we’re up against a very challenging budget environment in this era of sequestration.”

As a consequence, he said, federal funding for gas-related transportation possibilities are likely to be scarce. “Programs and what we call incentives in effect are facing reductions, not expansions,” he said.

In addition to new limits on federal incentives or subsidies, Wyden pointed out that broader use of natural gas faces a challenge in wide-scale distribution.

“The question is, how does America get natural gas from where it’s produced to where it’s needed,” he said.

He said that US oil and natural gas producers “are the ‘gold standard’ for development, leading the rest of the world”.  “Now America needs an infrastructure to match that standard.”

“That doesn’t just mean more pipelines,” he added, “it means better pipelines” and computer-based infrastructure to advance more efficient distribution.

The greatest potential expansion role for natural gas is as a road-vehicle transportation fuel. “Natural gas offers an opportunity, along with renewable fuels, to continue to diversify the fuel mix of our transportation fleet,” Wyden said.

However, he noted, “there are fewer than 600 natural gas fuelling stations that are open to the public,” and that lack of retail distribution inhibits consumer interest.

“Natural gas vehicles won’t be a real alternative for consumers unless fuelling stations are more widely available,” Wyden said, “but it doesn’t make good business sense to open natural gas fuelling stations if there aren’t vehicles on the road to use them.”

“I would very much like to have a nickel for every time someone talks about the chicken and the egg in connection with this discussion,” he said, “but it is obvious that is a very real part in this equation.”

The hearing heard testimony from large truck fleet operators, including United Parcel Service (UPS), engine and truck manufacturers, natgas utilities and operators of retail gasoline service stations.

In the second hearing, to be held 21 May, the committee will hear from chemical sector officials, including those representing the American Chemistry Council (ACC), Huntsman and the Industrial Energy Consumers Association (IECA).

US petrochemical producers and downstream chemical manufacturers have expressed concern about government-mandated efforts to shift private-sector US vehicle fleets from petroleum-based fuels to natural gas, fearing that a rapid expansion of gas consumption could trigger supply constraints and higher prices.

The US petrochemical sector is heavily dependent on natgas as both a feedstock and power fuel.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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