Railroads will test switch to natural gas

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Posted: Saturday, January 25, 2014 12:00 am | Updated: 11:10 am, Tue Mar 25, 2014.

The diesel-burning locomotive, the workhorse of American railroads since World War II, will soon begin burning natural gas — a potentially historic shift that could cut fuel costs, reduce pollution and strengthen the advantage railroads hold over trucks in long-haul shipping.

Rail companies want to take advantage of booming natural gas production that has cut the price of the fuel by as much as 50 percent. So they are preparing to experiment with redesigned engines capable of burning both diesel and liquefied natural gas.

Natural gas “may revolutionize the industry much like the transition from steam to diesel,” said Jessica Taylor, a spokeswoman for General Electric’s locomotive division, one of several companies that will test new natural gas equipment later this year.

Any changes are sure to happen slowly. A full-scale shift to natural gas would require expensive new infrastructure across the nation’s 140,000-mile freight-rail system, including scores of fueling stations.

The change has been made possible by hydraulic fracturing mining techniques, which have allowed U.S. drillers to tap into vast deposits of natural gas. The boom has created such abundance that prices dropped to an average of $3.73 per million British thermal units last year — less than one-third of their 2008 peak.

Over the past couple of years, cheap gas has inspired many utilities to turn away from coal, a move that hurt railroads’ profits. And natural gas is becoming more widely used in transportation.

The savings could be considerable. The nation’s biggest freight railroad, Union Pacific, spent more than $3.6 billion on fuel in 2012, about a quarter of total expenses.

But there’s no way all of that diesel will be replaced. Railroads and locomotive makers are looking primarily at ways to retrofit existing machines to burn a mix of diesel and natural gas because that will be the quickest and easiest way to adopt the new technology.

Locomotive makers have not yet set the prices of their retrofit kits, but railroads expect they will be cheaper than a new locomotive costing $2 million.

Railroads plan to use liquefied natural gas, which is not as readily available as other forms of gas because it must be cooled to minus 260 degrees. That step adds to the price, but the amount varies based on how the process is done.

The projected cost comparisons do not include the millions of dollars railroads would have to spend on a network of natural gas fueling stations along their tracks. That expense won’t be clear until after the tests, when railroads decide whether to build their own liquefaction facilities or just store fuels.

“There are a lot of factors that aren’t accounted for yet,” said Michael Iden, who oversees locomotive engineering at Union Pacific.

Locomotive makers say natural gas engines could also significantly reduce emissions compared with diesel locomotives.

From the outside, natural gas locomotives will not look much different, but they will have to pull a tank car behind the engine to carry enough liquefied natural gas, or LNG, to have a similar range to diesel units.

Both of the major locomotive manufacturers, General Electric and Caterpillar’s Electro-Motive Diesel, have developed prototypes that will be tested by Union Pacific, CSX, BNSF and Canadian National railroads beginning this year.

If the projected cost savings are realized, railroads would improve their profits and better compete against trucks, where they already hold the advantage on deliveries longer than 500 miles.

Edward Jones analyst Logan Purk sounded one note of caution: Natural gas prices have always been volatile, and they could climb if gas exports expand significantly and more industries switch over to natural gas.

This isn’t the first time railroads have flirted with natural gas locomotives. Both Union Pacific and BNSF spent several years working on the concept in the late 1980s and 1990s.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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