Market Snapshot: LNG Imports by Truck
Release date: 2014-10-30
Historically, natural gas and oil prices have tracked fairly closely on an energy content basis. Starting in 2009 a wide spread between the two has developed, with natural gas prices moving lower than oil-based products.
Figure Sources and Description
Sources: Natural Resources Canada, U.S. Energy Information Administration, NEB calculations
Description: This line chart shows energy equivalent fuel prices for crude oil (West Texas Intermediate), natural gas (Henry Hub) and wholesale diesel (Canadian monthly average) in U.S. dollars per million British thermal units. All three fuel prices tracked relatively closely (with the diesel price generally highest, followed by crude oil and natural gas) until 2007 when prices started opening up and briefly narrowing in 2009. Afterwards the natural gas price stayed in the 3 to 5 dollar range while the crude oil and diesel prices moved higher though 2010 and 2011 and continue to stay higher than the natural gas price.
This relatively lower price of natural gas is spurring interest in using liquefied natural gas (LNG) in place of oil products in applications such as freight transport, mining and oil and gas drilling. LNG is natural gas that is chilled to -162 degrees Celsius, at which point it becomes a liquid that take less room to transport.
Despite relatively lower natural gas prices, adoption of LNG as a fuel has been modest, mainly due to uncertainty in future oil and natural gas pricing, and the lack of LNG liquefaction and refueling infrastructure.
However, 2013 showed signs that LNG adoption is beginning to overcome these challenges. In the past few years LNG imports from the United States into Canada via truck have increased from zero in 2011 to 47 million cubic feet (1335 thousand cubic meters). While these are really small volumes of natural gas, it suggests that some end-users are now using LNG as a substitute for oil based fuels.
| Annual LNG Volume - Gas Equivalent (Million Cubic Feet) |
Annual LNG Volume - Gas Equivalent (Thousand m3) |
|
|---|---|---|
| 2011 | 0 | 0 |
| 2012 | 1.1 | 32 |
| 2013 | 47 | 1 335 |
| 2014 | 68.1 | 1 928 |
Nearly all LNG imported by truck has come across the Alberta border. However, several recent developments in LNG infrastructure will bring liquefaction closer to many consumers in Canada. Ferus Natural Gas Fuels and ENN Canada Corporation have partnered to build liquefaction plants in Edmonton and Vancouver by 2016, which ENN will use to supply its refueling stations for LNG vehicles. North Dakota LNG LLC recently completed a facility in North Dakota near the Canadian border which could provide a source for LNG in southern parts of the Prairies. There is also growing interest in eastern Canada with Gaz Metro planning to expand its existing facilities in Montreal and Union Gas expressing interest in selling LNG at its plant in Hagar, Ontario.
Along with the rising LNG imports by truck, these plans demonstrate increasing momentum behind substituting LNG for oil-based fuels in the industrial and transportation sectors across Canada.
Statistics on LNG imports are available on the NEB website.
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