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LNG Could Push Diesel Trains Into History Books

Liquefied natural gas could do to diesel-powered locomotives what the latter did to steam engines: put them into the history books.

A report from the Energy Information Administration said that LNG “will play an increasing role in powering freight locomotives in coming years.”

It’s a game of economics. “The large potential fuel cost savings from the switch to LNG locomotives from diesel has resulted in great interest on the part of the freight rail industry, observers, and analysts,” EIA Economist Nicholas Chase said in his report.  Railroad companies have likened the transition to LNG-powered trains to the so-called “dieselization” of the industry in the 1940s and 50s, when diesel-powered locomotives ousted steam engines, Chase said.

Across the seven U.S. freight railroads, a total of 3.6 billion gallons of diesel fuel was consumed in 2012—or seven percent of all diesel used in the U.S. That fuel has cost the industry more than $11 billion, equaling 23 percent of its total operating cost, according to the report.

Diesel is projected to cost more than three times as much as natural gas through 2020, according to the EIA, providing a powerful incentive to switch. The fuel savings could be more than $1.5 million per engine, more than offsetting the $1 million more it costs for a new LNG locomotive compared to a diesel, the report said.

The fuel savings play out across a wide range of scenarios in the report; the price for crude oil would have to plummet for diesel to become competitive on a cost basis.

Canadian National Railway retrofitted the diesel engines to run on LNG. The retrofitted locomotives are paired with a natural gas fuel tender, or
specially equipped and protected tank car, between them. Photo: Canadian National Railway

Potential Roadblocks
While some are predicting a dieselization-type revolution, others caution this could be more of an evolutionary process.

“Other industry experts have responded with more caution, likening the switch (to LNG) to the more evolutionary transformation of diesel-electric freight rail locomotives from direct current to alternating current propulsion that has been occurring since the early 1990s,” Chase writes.

While back-of-the-envelope calculations based on fuel cost comparisons make the choice pretty straightforward, Chase cautions “other factors, including operational, financial, regulatory, and mechanical challenges, also affect fuel choices by railroads.”

The report goes on to list a host of obstacles the industry will have to negotiate in a full-blown transformation to LNG. Among them:

  • A new delivery infrastructure for locomotive fuel. Natural gas would need to be delivered to fuel depots, either by truck in smaller quantities, as LNG or perhaps by pipeline.
  • Refueling infrastructure could also complicate the interoperability of the rail network, depending on how quickly modifications could be made to accommodate refueling at multiple points around the nation.
  • Operations could be further affected because of the cost of training staff at refueling depots and in maintenance shops, updating maintenance facilities to handle LNG locomotives and tenders, and managing more extensive logistics.
  • LNG locomotives and tender cars could require more maintenance than their diesel counterparts.
  • All of these operational changes would require two infrastructures, as the old would have to be maintained as diesel-fueled locomotives transitioned out of service across several years.

Chase notes that if there “is a compelling business case,” the switch over could be done in 20 years, just like the diesel revolution. “However, many cost and operational efficiencies made diesel locomotives superior to steam locomotives, and the same dynamic may not be seen with LNG,” Chase writes.

LNG Could Push Diesel Trains Into History Books was originally published on Ideas Lab

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