U.S. LNG Supply for Natural Gas Vehicles Set to Double

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Shell (NYSE: RDS-B  ) recently announced it would build two new liquefied natural gas (LNG) fuel plants to supply all types of heavy-duty natural gas vehicles. Shell's general manager for the America's, James Burns, estimated these will double the liquefied-gas manufacturing capacity in the U.S. and Canada.

LNG is not to be confused with compressed natural gas, or CNG, which is used in cars and light-duty trucks. LNG is used in large-scale trucks, boats, and industrial uses. It is better for large vehicles to use LNG as it is much denser than CNG, requiring less storage space on board. With CNG or LNG, the big draw is cheaper refueling costs. A gallon of CNG ranges in price from $0.80 to $1.70.

As my colleague Arjun Sreekumar wrote recently, there are two challenges holding back natural gas vehicles:

1. High up-front costs.

2. Limited refueling capacity.

For truckers and other heavy users of fuel, the cheaper refueling costs easily make up for the high up-front costs in around a year. It's really the limited refueling capacity that is holding truckers back from making the switch.

The limited refueling capacity is being worked on by the likes of Clean Energy Fuels (NASDAQ: CLNE  ) and TravelCenters of America (NASDAQ: TA  ) to make LNG a viable option for truckers in the future. Clean Energy Fuels, with financial backing from Chesapeake Energy (NYSE: CHK  ) , is developing a network of 150 LNG stations at Flying J truck stops across the county. For its part, TravelCenters of America signed a memorandum of understanding with Shell in June 2012 to build natural gas refueling lanes at around 100 TravelCenters of America truck stops around the country.

When Shell announced on Monday its new liquefaction plants, it also announced that these would be the basis for two new natural gas refueling networks. The first would be in the Gulf Coast Corridor (Texas and Louisiana) with the liquefaction unit at its facility in Geismar, Louisiana with distribution provided by a subsidiary of Martin Midstream Partners¬† (NASDAQ: MMLP  ) .

The second network would be in the Great Lakes Corridor with the liquefaction unit at its facility in Sarnia, Ontario, Canada. This facility will provide LNG to all five Great Lakes as well all the bordering U.S. states and Canadian provinces.

Once these networks are complete we should see more and more truckers begin using LNG for fuel, hopefully starting a virtuous cycle of refueling stations deciding on their own to add LNG and CNG refueling options.

Foolish bottom line

There are many different ways to play the energy sector, and The Motley Fool's analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2298210, ~/Articles/ArticleHandler.aspx, 9/27/2016 11:52:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,180.50 85.67 0.47%
S&P 500 2,154.70 8.60 0.40%
NASD 5,288.63 31.14 0.59%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 11:36 AM
CHK $6.14 Down -0.49 -7.33%
Chesapeake Energy CAPS Rating: ***
CLNE $4.31 Down -0.09 -2.14%
Clean Energy Fuels CAPS Rating: ****
MMLP $20.17 Down -0.07 -0.35%
Martin Midstream P… CAPS Rating: ****
RDS-B $49.70 Down -0.76 -1.50%
Royal Dutch Shell… CAPS Rating: ****
TA $7.01 Up +0.01 +0.14%
TravelCenters of A… CAPS Rating: ***