Royal Dutch Shell plc is proceeding with two small-scale natural gas liquefaction units in the transport corridors of the Great Lakes and Gulf Coast regions to provide fuel for marine and heavy-duty on-road commercial users.

The company began a similar project using liquefied natural gas (LNG) in Alberta in 2011 and also plans to use natural gas as a fuel in its own operations, the company said Tuesday.

“Natural gas is an abundant and cleaner-burning energy source in North America, and Shell is leveraging its LNG expertise and integrated strength to make LNG a viable fuel option for the commercial market,” said Shell Oil Co. President Marvin Odum. “We are investing now in the infrastructure that will allow us to bring this innovative and cost-competitive fuel to our customers.”

In the Gulf Coast Corridor, Shell plans to install a small-scale liquefaction unit (0.25 million tons per annum) at its Shell Geismar Chemicals facility in Geismar, LA. The unit will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana.

To service oil and gas and other industrial customers in Texas and Louisiana, Shell is expanding its existing relationship with fuels and lubricants re-seller Martin Energy Services, a unit of Martin Resource Management Corp. (MRMC). MRMC and its publicly traded affiliate, Martin Midstream Partners LP, will provide terminalling, storage, transportation and distribution of LNG.

Shell has a memorandum of understanding with Edison Chouest Offshore companies (ECO) to supply LNG fuel to marine vessels that operate in the Gulf of Mexico and to provide what is anticipated to be the first LNG barging and bunkering operation in North America at Port Fourchon, LA. The LNG transport barges will move the fuel from the Geismar production site to Port Fourchon where it will be bunkered into customer vessels.

In the Great Lakes, Shell plans to install a small-scale liquefaction unit (0.25 million tons per annum) at its Shell Sarnia Manufacturing Centre in Sarnia, ON. The project will supply LNG to all five Great Lakes, their bordering U.S. states and Canadian provinces and the St. Lawrence Seaway. The Interlake Steamship Co. is expected to be the first marine customer in the region as it begins the conversion of its vessels.

Pending final regulatory permitting, the two liquefaction units are expected to begin operations and production in about three years, Shell said.

The company also is working to use LNG as a fuel in its own operations or to support its operations. Shell has chartered three dual-fuel offshore support vessels from Harvey Gulf International Marine utilizing Wartsila engine and LNG system technology. The vessels will support Shell operations in the Gulf of Mexico. Shell has also begun to transition many of its onshore drilling rigs and hydraulic fracturing spreads to use LNG fuel. These conversions can reduce fuel costs and emissions, Shell said.

Shell recently struck a deal to acquire part of Repsol SA’s LNG portfolio outside North America, in particular adding LNG capacity in the western Atlantic Basin from Atlantic LNG in Trinidad & Tobago, and in the East Pacific from Peru LNG (see Daily GPI, Feb. 27).

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