Railways have figured largely in the North American shale gas boom.
Most often, the crude and natural gas from the shale deposits are shipped through pipelines. But pipeline infrastructure requires permits and takes a significant amount of time to build once approval is acquired.
Railroads, on the other hand, are already conveniently in place.
Roughly 25 percent of Bakken crude is currently carried by railways like Berkshire Hathaway’s (NYSE: BRK.A) BNSF Railway Co. and Canadian Pacific Railway Ltd. (TSE: CP).
And the railways also move materials required for drilling, like construction equipment and machinery, as well as byproducts like petroleum coke and sulfur.
But Canadian National Railway (TSE: CNR) believes it could get involved even further. The company is now starting to test how well its locomotives will run on natural gas.
Right now, the trains run on diesel. But diesel, along with its high emissions levels, is pricey. Natural gas, on the other hand, is cleaner and much cheaper.
So the company is doing a test run. It retrofitted the engines in two of its locomotives to run on 90 percent natural gas and 10 percent diesel for ignition. The locomotives will travel the 298 miles between Edmonton and Fort McMurray – from a pipeline hub to an area of oilsands production – to test the capability.
Switching to natural gas would have a big effect on emissions. Carbon dioxide emissions would be reduced by 30 percent, while nitrogen oxide emissions will go down by 70 percent.
Encana Corp. (TSE: ECA), a Canadian natural gas company, will assist Canadian National in fueling and maintenance in Edmonton.
The railway company is also engaging in a longterm project with Caterpillar Co. (NYSE: CAT) subsidiary Electro-Motive Diesel, Westport Innovations Inc. (TSE: WPT), and Gaz Metro. Together, the companies will work on developing a new locomotive engine that runs on natural gas and a tank car to carry the gas.
Westport received C$2.3 million from Sustainable Development Technology Canada to fund the project. The group hopes to be conducting laboratory tests by 2013 and to have a prototype by 2014.
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From the Sacramento Bee:
Keith Creel, executive vice-president and chief operating officer, said: “CN launched this locomotive test to explore the use of natural gas as a potential alternative to conventional diesel fuel. This reflects CN’s continuing drive to look for ways to improve operating efficiency and advance the company’s sustainability agenda.
“Natural gas has a lower carbon content compared with diesel fuel, so that locomotives using natural gas – if the railway technology employing this form of energy ultimately proves viable – would produce significantly fewer carbon dioxide emissions.”
A number of power companies have begun to switch from coal to cheaper and cleaner natural gas, a switch that accounted for a recent slip in carbon dioxide emissions to a twenty-year low.
Automotive companies are also discussing the option of natural gas vehicles. Currently, Honda (NYSE: HMC) is the only company to have produced a natural gas vehicle for consumers, but companies like Clean Energy Fuels Corp. (NASDAQ: CLNE) and Shell (NYSE: RDS.A) are aiming to build up natural gas truck fleets and fueling infrastructure, a key component of driving this switch.
That’s all for now,
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