You’re as Cold as Ice—The Economics of Switching from Diesel to LNG

The shift from diesel to LNG (and sometimes CNG or field gas) as a fuel for drilling rigs and hydrofracturing pump engines is underway, and there is interest in having ships, locomotives and long-haul trucks run on natural gas from LNG too. But before investing in new or converted engines that can run on natural gas or on a diesel-natural gas blend, diesel and shipping fuel users need answers to three questions: What will it cost? How much will we save? And—this is important, too--is the LNG infrastructure sufficiently robust to support the switch?Today we explore the economic ins and outs of converting from diesel to gas, and describe the current state of domestic LNG supply infrastructure.

With US natural gas selling at roughly one-quarter the price of crude oil on a per-BTU basis, it is not surprising that major consumers of diesel (an oil-based fuel whose pricing is closely linked to crude) are exploring the possibility of switching to natural gas from LNG. As we said in our Series Opener on the domestic use of LNG, diesel engines that power drilling rigs, fracking pumps, locomotives and long-haul trucks can be converted to dual-fuel operation or replaced with natural gas-only engines, as can ship engines now fueled by marine distillate or bunker fuel. LNG, produced mostly with modest-size (less than 200 Mgal/d) plants sited near major customers, is seen as a logical, cost-effective and consistent quality source of gas. LNG also stores several times as much gas per gallon volume as CNG (helping with weight and storage space). But there are significant costs involved in making a switch, and even some risk—the biggest of which is whether, after making the investment to change to dual-fuel or all-gas engines, you can count on LNG to be available when and where you need it. To help sort out the economics and the risk, let us first look at what is involved in switching engines from diesel (or shipping fuel) to dual-fuel or all-gas.

A diesel engine uses compression (and not a spark plug) to initiate combustion. A dual-fuel engine can either be fueled by diesel only or by a mix of diesel and gas. When it is in diesel-only mode, it operates just like a diesel engine does. When it is switched to dual-fuel operation, a mix of air and natural gas (vaporized LNG) is drawn into the cylinder, just as it would in a spark-ignited engine. Near the end of the compression stroke, diesel fuel is injected, and with the compression it ignites, and the natural gas is ignited with it (see Figure #1).

Source: Cummins Engines (Click to Enlarge)

A typical drilling rig is powered by three diesel engines, and many have a back-up generator just in case. Converting each engine so it can burn a mix of natural gas and diesel (typically 50% to 70% gas and 30% to 50% diesel) can cost upwards of $75,000 (or a total of $300,000 for one drilling rig), and other LNG-related costs (including storage tanks and a vaporizer) can more than double that per-rig cost. Frack pumps also require several engines for power. Prometheus Energy offers three calculators to help: calculators for switching drilling rigs to dual-fuel engines (http://www.prometheusenergy.com/calc/drilling/dual-fuel/) and to new engines fueled only by LNG-sourced gas (http://www.prometheusenergy.com/calc/drilling/ng/); and a calculator for switching fracking pump engines from diesel to dual-fuel (http://www.prometheusenergy.com/calc/fracturing/dual-fuel/).

Join Backstage Pass to Read Full Article

About the song

“Cold As Ice” was written by Lou Gramm and Mick Jones and appears as the second song on Foreigner’s debut album, Foreigner. Released as a single in July 1977, the song went to #6 on the Billboard Hot 100 Singles chart. Personnel on the record were: Lou Gramm (lead vocals), Mick Jones (lead guitar, piano, backing vocals), Ian McDonald (rhythm guitar, mellotron, backing vocals), Al Greenwood (organ, synthesizer), Ed Gagliardi (bass, backing vocals), Dennis Elliott (drums), and Ian Lloyd (backing vocals).

Foreigner was the self-titled debut album by the British-American band of the same name. It was recorded in November 1976 at The Hit Factory and Atlantic Recording Studios in New York City, with John Sinclair, Gary Lyons, Mick Jones and Ian McDonald producing. Released in March 1977, the album went to #4 on the Billboard Top 200 Albums chart. It has been certified 5X Platinum by the Recording Industry Association of America. Three singles were released from the LP.

Foreigner is a British-American rock band formed in New York City in 1976 by Brits Mick Jones and Ian McDonald, with New Yorker Lou Gramm. Jones had previously been in Spooky Tooth, and McDonald had been a member of King Crimson. They recruited Americans Al Greenwood, Ed Gagliardi and Dennis Elliot to complete the band. Jones came up with the name Foreigner to reflect the British-American connection. They have released nine studio albums, seven live albums, 20 compilation albums, and 47 singles, and have sold over 50 million records worldwide. Thirty-eight members have passed through the ranks of the band since its inception. Original member Mick Jones, along with ex-Dokken bassist Jeff PIlson, ex-Hurricane singer Kelly Hanson, and four other musicians still tour as Foreigner. They are slated to start a North American tour in March 2024.

You’re as Cold as Ice—New Gas Liquefaction Plants to Serve US Drillers and Frackers

Author Housley Carr

Many exploration and production (E&P) companies have indicated their sincere interest in at least partly weaning themselves away from diesel—and onto natural gas, much of it from LNG—as their fuel of choice for the engines that power their drilling rigs and hydrofracturing pumps. But there has been some hesitance in making the switch, in part due to concern about whether the LNG-supply infrastructure is sufficiently reliable. The same is true for railroads, trucking companies and ship owners—they too see potential savings in moving to engines fired partially or entirely by LNG, but they need assurance that their new fuel source will be plentiful and at hand. Today we detail all the new liquefaction capacity being developed specifically to serve these new markets.

Thu 8/28/14 - Blog

Natural Gas

You’re as Cold as Ice—The Growing Domestic Market for LNG

Author Housley Carr

Say “LNG” and the first thing that comes to mind for most of us is the potential for liquefied natural gas exports to Asia and other overseas markets. One of the hottest LNG markets right now, though, is domestic, and involves super-cooling natural gas into LNG and using it to power drilling rigs and hydraulic fracturing pumps, as well as ships, locomotives, and long-haul trucks. A number of small liquefaction plants have been operating for years in the US – most connected to peak shaving generation facilities but projects with capacity totaling more than 2 million gallons/day are under construction or being planned. Today we begin a new series examining the increasing use of LNG as a cheaper, cleaner alternative to diesel and shipping fuel, and the LNG production capacity being developed to keep pace with rising demand.

Wed 12/6/23 - Blog

Natural Gas

Cold As Ice - Pending Closure of Everett LNG Terminal Poses Challenge for New England Gas Supply

Author Lisa Shidler

The Everett LNG import terminal, a mainstay of Boston’s gas grid, is expected to close by the end of May 2024, raising questions about future gas supply in New England. The terminal’s closure is closely tied to the imminent loss of its biggest customer, the 1,413-MW Mystic generating station — the region’s largest fossil-fuel plant. Constellation Energy, which owns both the Everett terminal and the Mystic power plant, has said it can’t keep Everett open next year when the Mystic plant closes unless another gas purchaser takes its place. In today’s RBN blog, we’ll address the impacts of Everett’s potential demise on New England in the short term and on regional gas supply during future polar vortex events.

View All Articles

Say Hello