A unit of General Electric said Monday it has completed acquiring substantially all of the assets of a Texas-based small-scale liquefied natural gas (LNG) design/manufacturing firm, underscoring a recent consultant report that the shale boom is creating a more viable market for natural gas in the transportation sector.

GE Oil & Gas (GE O&G) has acquired Salof Companies, a company specializing in cryogenic plant design and fabrication for small LNG and carbon dioxide (CO2) operations. Already involved in large-scale LNG, GE recently launched LNG solutions, which is to offer products with “significantly smaller footprint and capacity.” GE sees Salof as complementary to that initiative.

GE said in North America the demand for small-scale LNG production is “growing as vast new discoveries of natural gas are making it cost-efficient to use natural gas for transportation.” This comports with a recently released white paper by the energy management consulting firm Pace Global that credits shale gas will making natural gas growth as a transportation fuel an inevitability.

“The transportation market represents the largest domestic market growth opportunity for natural gas, and thus, it will attract the required capital and creativity to overcome existing challenges,” according to the Pace white paper, “LNG as a Transportation Fuel…Not ‘If’ but ‘When.'”

Pace’s report called the rapid rise of shale gas “transformative and enduring,” citing Federal Energy Information Administration projections that U.S. natural gas production will increase 44% (from 23 Tcf to 33.1 Tcf) by 2040, pushed along by shale gas.

With companies like GE positioning themselves in the small-scale LNG sector, the projections take on more of a realistic context. “Adding Salof to our portfolio expands our capabilities and manufacturing footprint in the small LNG space, while Salof can draw upon GE’s breadth and global operations, positioning both companies for growth,” said GE O&G CEO Daniel Heintzelman.

Based in Schertz, TX, Salof employs nearly 200 workers at its manufacturing facility and receives engineering support through Beijing enCryo Engineering Co. Ltd, a joint venture controlled by Beijing Maison Engineering Co. Ltd. GE has entered into an agreement to acquire a 50% ownership interest in the joint venture.

Pace’s white paper talked about the need for more comprehensive LNG transportation solutions, and it cited as examples the recent leasing of natural gas vehicles by Ryder Systems Inc. in Southern California (see Daily GPI, Aug. 16, 2010) and Clean Energy Fuels Corp.’s vertically integrated approach to providing fuel and fueling stations.

In its report, Pace talked about “asset development and investment opportunities” nationwide, driven by small-scale liquefaction technologies and regional LNG transportation solutions. “Who will capture the $50 billion infrastructure investment opportunity? We believe the spread play [gas to diesel] is too strong for LNG as a transportation fuel not to gain considerable traction. So the question is indeed ‘when’ and not ‘if,'” the firm said.

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