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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Can LNG Kill Oil?

Natural gas--the bridge fuel to our renewable future--is cleaner and cheaper than oil. If it’s the clearly green fuel and already widely used to generate power, why isn’t the whole world driving natural gas-powered cars in larger numbers? And can natural gas one day replace oil?

Gas is so cheap right now that many producers are struggling to turn in a profit. Last year in the United States, gas prices actually went below zero on several occasions. There could hardly be a better time for a gas push, to use until carmakers bring their EVs into a more affordable range that can rival that of internal combustion engine vehicles.

In fact, there are close to 30 million gas-powered cars in the world. These 30 million vehicles use compressed natural gas rather than LNG, but LNG is a direct competitor for diesel in trucks, which account for a substantial part of the global motor fleet and emissions. These close to 30 million gas-powered cars are concentrated in Asia, Latin America, and Europe, with North America and Africa far behind with about a quarter of a million gas cars each.

A couple of decades ago, when oil was expensive, some poorer parts of Europe saw a surge in car retrofittings with CNG. At the time, these retrofitted cars, besides being a ticking bomb with their gas tank in the boot, did not have a lot of power. If you wanted to drive more cheaply, you sacrificed horsepower.

This is no longer the case. 

This 2012 road test of a bi-fuel truck by Jalopnik suggests that things have progressed. And power, at least, is no longer an issue with CNG-powered cars. Yet there is another issue that is keeping the number of CNG cars low. There are too few fueling stations. Related: The Coronavirus May Mark The End Of Russia-OPEC Cooperation

It’s a truth that EV makers are aware of. If you want to sell electric cars, you need to build a charging infrastructure. Fail at that, and your EV vision is dead.

The infrastructure problem could be solved over time if people are motivated to buy CNG cars. They are cleaner than gasoline and diesel cars, after all, why not switch? Because, according to some studies, gas is not, in fact, cleaner.

Trucks are a major growth area for natural gas, this time in liquefied rather than compressed form. And LNG use in trucks is growing. Yet European NGO group Transport and Environment last year published a study that claimed LNG-powered trucks were up to five times more polluting than diesel trucks, at least in the nitrous oxides area. It was a surprising conclusion and it rightly angered the truck industry. It promptly accused Transport and Environment of cherry-picking their data.

“The test (selectively) did not take into consideration the sulfur content in diesel, which after combustion generates particles and is a primary source of air pollution,” Mehdy Touil, an LNG expert from Novatek’s Yamal LNG project, told Oilprice.

While trucks in Europe and North America use low-sulfur diesel fuel, there are plenty of places where trucks run on high-sulfur diesel, at up to 50 ppm. The sulphur content of LNG? Less than 1 ppm. What’s more, diesel fuel engines produce soot and particulate matter, while LNG engines don’t, just as they don’t produce dust or fumes, Touil added.

Not all agree with T&E’s conclusions. The Netherlands Organisation for Applied Scientific Research, for instance, last year said that the Volvo FH LNG truck had almost 20 percent lower carbon dioxide emissions than Euro 6 diesel trucks. This is the latest and tightest emissions standards in the EU.

Yet T&E would argue that this doesn’t make natural gas vehicles better.

Another study called “CNG and LNG for vehicles and ships – the facts” points out that although some CNG and LNG vehicles do have lower tailpipe emissions of some greenhouse gases, their lifecycle emissions are often higher, which, according to T&E, makes it even worse than gasoline and diesel. Related: Canada Rocked By Anti-Pipeline Protests

This is difficult to accept given the reputation that natural gas has built for itself as the lower-emission fuel, but what T&E and other gas critics focus on is methane and methane leaks in particular. Methane, being a much more potent greenhouse gas than carbon dioxide, is drawing increased attention from environmentalists and regulators. Yet LNG and CNG vehicles do not emit methane. It’s the methane leaks during the process of moving natural gas (mostly methane) from the well to the liquefaction train and the fueling station that are giving a bad rep to the cleaner fuel.

For those of an all-or-nothing mentality, no fossil fuel will ever be clean enough to use anywhere. For those of a more realistic bent, it’s a question of choice. We can’t have zero-emission ICE vehicles, but we can have lower CO2 emissions, no particulate matter emissions, and no sulphur emissions. Enter LNG and CNG, which, it bears repeating, are quite a bit cheaper than oil-derived fuels on top of being cleaner.

Natural gas may not kill oil, but it could substantially undermine demand for it in truck and ship transport. A study that Shell recently conducted points to these areas as the biggest growth drivers for LNG. Long-haul trucks and ships traditionally use diesel fuel and fuel oil, both highly polluting even with increasingly tougher emissions standards. No wonder that LNG was flagged as the best way forward following the entry into effect of the International Maritime Organisation’s 2020 sulfur emission rules. 

Investments in LNG-powered ships are growing, the Wall Street Journal reported earlier this month. Just recently, one of the world’s biggest container ship operators, French CMA CGM, ordered 22 LNG-powered vessels, of them nine megaships. Total orders for LNG ships stand at 243, but the number may grow over the next few years as there are no other alternatives—not on an industry-wide scale.

Interestingly enough, CNG car sales are also on the increase. A study from Market Research Insights suggested recently that the market for cars powered by natural gas will grow at a CAGR of 7.8 percent over the next five years, reaching $10.39 billion in 2024. That’s some pretty solid growth even if it is not truly global. In India alone—one of the biggest car markets in the world—CNG cars could come to account for half of all new sales by 2030, according to Nomura 

So, natural gas may not kill oil entirely, not in any observable future. But it could make it uncomfortable by eating into its demand in the key sector of transport, and maritime and freight transport in particular.

By Irina Slav for Oilprice.com

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  • Ronald Wagner on February 16 2020 said:
    This is the best article I have seen on oilprice.com. I have been promoting natural gas for eight years, without pay, because it is the solution to pollution. It is far more abundant than oil , cheaper, and cleaner. It is a practically free fuel that has a long and proven history of running ICE engines. It can also be used as a dual fuel with gasoline or diesel as an alternative for any engine small or huge.

    So called environmentalists who oppose all fossil fuels are misinformed and are opposing the best fuel to reduce pollution around the world. I am speaking of real pollution, not just CO2. Diesel shortens the life of billions of people around the world. Whatever is replaced will help health and natural gas will provide a less expensive fuel. America already has a minimal natural gas station network in all but Montana, Wyoming, and the Dakotas. It can be seen at
    http://www.cngprices.com/station_map.php

    I have thousands of links on natural gas at allmyrants.org.
  • Mamdouh Salameh on February 17 2020 said:
    Neither LNG nor electric vehicles (EVs) can replace crude oil in global transport throughout the 21st century and probably far beyond. It is very doubtful that an alternative as versatile and practicable as oil, particularly in transport, could totally replace oil in the next 100 years and beyond.

    While an increasing number of EVs on the roads coupled with government environmental legislations could slightly decelerate the demand for oil, EVs could never replace oil in global transport. Even if 50 million EVs were on the roads by 2040, this will only reduce the global demand for oil by 0.53 billion barrels (equivalent to 1.45 mbd) or 1.31% of global oil demand by then.

    And whilst EVs are benefiting from evolving technologies, internal combustion engines (ICEs) are equally benefiting from the evolving motor technology. As a result, ICEs are not only getting more environmentally-friendlier but they are also able to outperform EVs in range, price, reliability and efficiency.

    Natural gas and LNG should be better used where they have the greatest impact on global energy transition and curbing the adverse impact of climate change. They are the pivots for global energy transition. Not only would LNG accelerate the transition from hydrocarbons to renewables, it could totally eliminate coal in electricity generation from the global energy mix. In so doing it will be rendering the greatest service to fighting climate change.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Annette Hunter on February 17 2020 said:
    Electric cars in much of the country are in good part highly efficient natural gas cars. The easiest, cleanest and most efficient way to power a car with natural gas is to charge and electric car late at night.

    CNG while cleaner and cheaper than gasoline requires both new cars and new infrastructure. The internal combustion engine is not nearly as efficient as a gas plant.

    The power grid extends to virtually every home. Off peak power can be delivered for very low incremental cost. In most cases little or no additional capacity is required for off peak charging.
  • Rudolf Huber on February 19 2020 said:
    The best thing going for LNG/CNG as a fuel - it works right now. No wonder-inventions necessary. No exotic alloys still to be developed. No superbattery still to be discovered. It works just as well as diesel, and even the price premium is gone. You can go LNG/CNG and be real clean now and if you really want to go ultra-environmentally friendly, you pay up for the bio-version of the fuel. No technical changes required. Just more cash.

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