Use of LNG as transportation fuel accelerates in B.C.

By Nelson Bennett, Business in Vancouver.

It may be a few years yet before any company starts exporting liquefied natural gas from B.C. to Asia. 

Meanwhile, B.C. producers are finding a small but growing domestic market for natural gas, in the form of liquefied natural gas (LNG) and compressed natural gas (CNG), in the trucking and marine transportation sectors.

Last month, BC Ferries received its second purpose-built LNG ferry from Poland. That brings to four the number of LNG-powered ferries that will soon be operating in B.C. waters. Two belong to BC Ferries, two to Seaspan Ferries Corp.

One more purpose-built intermediate-class LNG ferry is still being built, and BC Ferries also plans to retrofit two Spirit-class vessels to run on LNG.

Meanwhile, more trucking fleets and public transit authorities, including TransLink, have also been making the switch from diesel to natural gas when they replace buses.

That’s a big benefit for Westport Fuel Systems (TSX:WPRT), which has supplied the natural gas engines for those buses.

BC Transit now has 74 buses in B.C. running on compressed natural gas, and another 46 are expected to be on the road by 2018. TransLink has 45 CNG buses on the road, and another 51 are expected to arrive by the end of this year.

Thanks to a surplus of new LNG plants, there is a glut of LNG on the market, which has historically been used mostly for thermal power generation.

But thanks to their low costs and low carbon emissions, natural gas and LNG are starting to replace gasoline and diesel as transportation fuels.

As of 2012, natural gas accounted for just 3% of the world’s transportation fuel, according to the U.S. Energy Information Administration (EIA), which estimates that share will grow to 11% by 2040.

The B.C. government is encouraging natural gas utilities like FortisBC and Pacific Northern Gas, which serves northern B.C., to try to develop these new domestic markets for LNG and CNG in transportation.

It recently amended its greenhouse gas reduction regulations to allow utilities to offer more incentives to the marine sector to convert vessels to LNG and invest in LNG fuel storage and in new sources of renewable natural gas.