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GE (NYSE: GE) LNG Project

Brian Hicks

Written By Brian Hicks

Posted September 20, 2013

General Electric (NYSE: GE) and its new team of partners announced yesterday plans to meet the growing demand by many U.S. industries for cleaner-burning, less expensive liquefied natural gas (LNG).

Many of you know about the massive amounts of domestic natural gas reserves the U.S. holds, but you might not know that when a company makes the switch from diesel to natural gas, it will effectively be saving between 20-40 percent in costs.

LNG FuelingThis has prompted many companies who for years have relied on diesel fuel to begin rethinking their strategy. Not only would natural gas help increase revenues nationwide, but it would also reduce the amount of carbon emissions created.

The U.S. shale boom has brought great opportunity, and a big part of its stateside success will be LNG. Now, it’s time to show companies that they can make the switch from diesel to natural gas confidently and without any disruptions to business.

This is what GE’s new consortium plans to do.

The Consortium

The consortium, called Eagle LNG Partners, and the roles each company plays, as stated by Hydrocarbon Processing:

  • Clean Energy (NASDAQ: CLNE) brings experience in developing, constructing and operating micro-LNG plants

  • Ferus Natural Gas Fuels offers tailored expertise in cryogenic and micro-LNG plants, along with understanding of cryogenic logistics that ensures uninterrupted fuel supply

  • GE Ventures plans to drive commercial and technical innovation

  • GE Energy Financial Services will provide capital for energy projects

With each of the four divisions working side by side with customers, the switch to LNG should be relatively painless.

Eagle LNG Partners will focus efforts primarily on the industries where demand is highest, like long-haul trucking, rail, mining, marine, and oil and gas services.

Clean Energy, based out of Seal Beach, California, is backed by Texas oil man T. Boone Pickens, who owned 25.3 percent of the company at the end of June. And while Pickens is Director and active board member of the company, he will have no involvement in the operations of Eagle LNG Partners.

The Mission

As stated before, Eagle LNG Partners is set up to transition companies as smoothly as possible from diesel fuel to LNG without any disruptions and maintain a continuous supply for operations.

When required, the consortium will have the ability to not only set these companies up for success, but also provide customers with an overall and complete LNG solution that would include transportation, delivery, storage, gasification, and dispensing of product.

From Hydrocarbon Processing:

“We have heard our customers say they want LNG delivered to their point of consumption at a predictable price, with certainty and redundancy of availability,” said Dick Brown, CEO of Ferus Natural Gas Fuels. “They want someone who has been in the business of owning and operating these plants, with the experience to facilitate the switch to natural gas, and who can deliver and dispense LNG safely and reliably without any disruption to operations.”

Each of the four branches have yet to comment on how much they will initially invest in the project, but generally, LNG liquefaction plants cost in the ballpark of $40 million to $100 million to construct.

According to Fuel Fix, natural gas accounts for only 0.1 percent of the transportation fuel used in the U.S. presently, and it would expand it to 3 percent if no additional efforts were made to increase its use as fuel.

With demand surging and that much room for growth, Eagle LNG Partners will seize the opportunity.

One industry, the long-haul trucking industry, has already been publicly calling for more LNG as major companies are intending to convert their fleets to natural gas.

Announcements have been popping up from the rail and marine companies, too.

Strategically, Eagle LNG Partners is looking at developing projects in Florida, Washington, Colorado, North Dakota, Ohio, and Texas.

These projects would be built around existing Clean Energy and Ferus Natural Gas Fuels plants, along with Clean Energy-GE LNG projects announced in the Northeast and Midwest, expected to be online in late 2015.

The Investment

Diesel fuel makers should prepare themselves for that “uh oh” moment because while the biggest, nastiest engines in the country are guzzling diesel today, it may not be the case tomorrow.

Big players like Royal Dutch Shell (NYSE: RDS-A) have already expressed plans to convert.

The only critics to the LNG switch are those that say natural gas extraction releases methane, a greenhouse gas that can be even more harmful than carbon released by burning other fuels.

One thing that is for certain is that it’s a lot cheaper, and for now, it seems to be cleaner, too. And with an abundance of it sitting right here at home, it’s the next logical choice.

GE, Clean Energy Fuels, and Ferus Natural Gas all have a one-third stake in the partnership, and all stand to bask in its glory as the switch takes over.

Bye, bye diesel.


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