US Railroads Mull Switch to LNG for Locomotives

Major US railroads are considering the use of LNG to fuel locomotives because of the potential for significant cost savings, reads a report released by the Energy Information Administration (EIA) on Monday.

‘Continued growth in domestic natural gas production, along with substantially lower natural gas spot prices compared to crude oil, is reshaping the U.S. energy economy and attracting considerable interest in the potential for fuelling freight locomotives with liquefied natural gas (LNG),’ reads the Annual Energy Outlook 2014.

The EIA documented the price difference between diesel fuel and LNG.

‘The large differential between crude oil and natural gas commodity prices translates directly into a significant disparity between projected LNG and diesel fuel prices, even after accounting for natural gas liquefaction costs that exceed refining costs. In the AEO2014 Reference case, the long-run price difference between locomotive diesel fuel and LNG in rail applications increases from $1.48/gal of diesel equivalent in 2014 to $1.77 in 2040,’ the EIA wrote in the note. 

However, despite LNG’s favourable economics compared with diesel fuel, some ‘key uncertainties’ remain.

The organization pointed out three main sets of problems. Firstly, the switch would require new expensive infrastructures, which would be possible only in case of large financial investment. Secondly, the building of LNG refuelling infrastructure ‘could also complicate the inter-operability of the rail network.’ This could lead to reductions in network flexibility and operational efficiency. Thirdly, operations would require well-trained staff able to carry out the maintenance, which is expected to be more complex than for the diesel counterparts.