With support from the governor's office, Wyoming oil/natural gas stakeholders on Monday introduced a strategy for using liquefied natural gas (LNG) produced in the state to replace diesel fuel in many applications within the oil/gas industry.
Gov. Matt Mead released a report that was authored by a clean fuels transportation consulting firm with backing from industry. "Wyoming LNG Roadmap Report" examines how some of the state's gas supplies turned into LNG can supplement diesel use in mining, rail, drilling, pressure pumping and over-the-road trucking industries.
Mead said the report by Gladstein, Neandross & Associates (GNA) confirms that there is "potential for LNG use in Wyoming that can add value to our natural gas."
The Powder River Basin (PRB) would be the heart of the LNG market, Mead said, and there is potential to supplement diesel in the state's high-horsepower industries. "We now have some concrete ideas for how we can make our abundant natural gas be even more valuable to our economy," the governor said.
Wyoming has a 24-year history in the still-miniscule LNG high-horsepower market with two PRB production facilities dating back to 1990 when they supplied an emerging market in Southern California. Burlington Northern later introduced the use of LNG in locomotives using Wyoming production. Adding to this base, the GNA report estimated the state has the potential to produce 186 million LNG gallons/year by the end of the next 10 years.
GNA completed the report for Mead and a stakeholder coalition that includes a broad assortment of private-sector industrial companies such as Ambre Energy, Anadarko Petroleum, Caterpillar, Chart Industries, Desser-Rand, Eagle LNG Partners, Encana, Ensign, GE Oil & Gas, Oneok Partners, Tallgrass Energy, Westport, and Wyoming Machinery.
The report said Wyoming ranks third among states in natural gas production and that in recent years there has been "significant momentum" building for using LNG as a diesel supplement. "The payoffs for Wyoming's economy and citizens are potentially very large," said the report, while acknowledging that barriers and challenges exist as outlined in the state's energy strategy (see Daily GPI, Nov. 16, 2012).
GNA concluded that there are three major benefits to making the push for LNG: reducing fuel costs for industrial customers; reducing emissions and greenhouse gases; and helping diversify the nation's fuel mix.
The collective market for mine haul trucks, locomotives, drill rigs, pressure pumping services, on-road semi-tractors and other large off-road equipment is about 634 million gallons of diesel/year. There are about 16,000 diesel-powered units collectively in the six sectors using tens of thousands of gallons of fuel annually.
Demand for LNG in the high-horsepower market could build steadily over the next 10 to 20 years, the report said. The demand is equivalent to 509,000 gallons/day of LNG production, or 38.7 MMcf/d.
"It is clear that a confluence of market forces will ultimately decide where, how and when an initial Wyoming LNG infrastructure buildout will proceed," the report said, asserting that a single large central LNG production unit is not the way to go. Developers would face risks in pursuing a single large-scale LNG plant in a market phasing in over a 10- to 20-year time span.
The report calls for three or four production facilities in the Powder River Basin and up to two plants in southwestern Wyoming, which includes Sublette, Lincoln, Sweetwater and Uinta counties.