LNG Could Challenge Oil As Transport Fuel

China may take the lead, along with the trucking sector, in the transport shift from oil to natural gas and liquefied natural gas, a report finds.

Michael Stoppard, Chief Gas Strategist for the consultant firm IHS, said lower crude oil prices have taken the spotlight off the pursuit for natural gas as an alternative transport fuel.

"Nonetheless, the shift to greater use of gas in trucks is set to continue," he said. "It is widely accepted that power generation is the primary growth market for natural gas demand, but gas as a fuel offers a new market with potentially more value."

While passenger vehicles and trucks are comparable in terms of oil consumption, the study finds truck fleets have better economics and a faster turnover when it comes to switching to alternative fuel sources.

Carrier UPS Freight in April said it was adding 65 LNG vehicles to its fleet. The new vehicles will replace diesel-engine tractors, which will result in a reduction in emissions and an efficiency of about 600 miles per tank of fuel, the company said.

A 2014 report finds the purchase price of gas-feed trucks may be prohibitive when compared with diesel trucks. While natural gas vehicle sales are increasing, the pace was not as fast as expected by some metrics.

IHS, in a report published from Paris, found natural gas and LNG could displace more than 1.5 million barrels of oil demand by 2030. Combined with shipping fleets, transportation demand could account for ten percent of the global LNG market.

"China, the world leader in LNG-vehicle adoption with annual sales orders of magnitude higher than in any other market, will remain critical to continued growth," the report adds.

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