Natural Gas Is Making Inroads to Clean Up This Dirty Industry

Shell's oil sands mining operations. Photo credit: Shell Flickr page.

The world's 10 largest mining companies use more than 2 billion gallons of diesel each year. It's a constant burn, as the industry has more than 28,000 large mining trucks around the world, each typically running around the clock. That's a steady stream of dirty diesel emissions that need to be addressed.

Westport Innovations (NASDAQ: WPRT  ) and Caterpillar (NYSE: CAT  ) are among the companies working on a solution. The partners are co-developing technologies for off-road engines that could substitute 95% of the diesel used in mining by replacing it with natural gas. Not only would that cut carbon dioxide emissions, but it would also cut other harmful emissions that come from burning diesel. That will enable the fuel to help clean up one aspect of the dirty mining industry.

Natural gas fueling oil production
In Canada, for example, mining trucks used in oil sands operations are a substantial source of carbon dioxide emissions, according to Royal Dutch Shell (NYSE: RDS-A  ) (NYSE: RDS-B  ) . That's why last year the oil sands miner and global energy giant announced that natural gas is its fuel of choice for a test project with Caterpillar to help it curb emissions.

Shell's emissions from the oil sands are rising as it continues to expand, in part because its trucks need to travel longer distances as the mine size increases. Because of this and other factors, carbon dioxide emissions from the oil sands are 5%-15% higher than most oil consumed in the United States. That bigger carbon footprint is one reason environmentalists are opposed to Canadian oil. However, if Shell and other oil sands miners can reduce emissions by using natural gas, it could make this oil a bit more palatable.

By land and by sea
Natural gas has the power to change more than just how mining trucks are fueled. Westport Innovations is working with a multitude of partners on natural gas solutions for both rail and marine transportation, which are critical logistical solutions for the mining industry.

These two industries offer an even greater opportunity to cut global emissions. The rail industry consumes 9 billion gallons of diesel a year, while the marine industry uses 13 billion. While only a portion of what's transported by train or boat is commodities produced by the mining industry, cleaning these emissions by switching to natural gas will certainly help reduce the industry's carbon footprint.

It's a daunting task that still needs new solutions. One company joining Westport Innovations in providing these solutions to the marine transportation industry is defense contractor Lockheed Martin (NYSE: LMT  ) , which once built large fuel storage tanks for NASA's Space Shuttle program and is now using that expertise to develop liquefied natural gas storage tanks for use by the marine transportation industry. In time, thanks to solutions like this, we really could see much of our world fueled by natural gas. 

Investor takeaway
Natural gas has the potential for a fuel change within the mining industry. It could clean up the industry's emissions, both on site and in the logistical solutions it uses to get its products to end users. Also, in North America, natural gas is a lot cheaper than currently used fuels, which could provide long-term cost savings to North American miners. That's a real win for shareholders and the environment.

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