IHS: Natural gas to challenge oil’s grip as transportation fuel

The use of natural gas as a transportation fuel, particularly for trucks and ships, could displace more than 1.5 million b/d of oil demand by 2030, according to a recent study by business information provider IHS.

The study, “LNG in Transportation: Challenging Oil’s Grip,” says that a combination of drivers—environmental, technological, and commercial—will drive greater adoption of gas in transport, with the highest level of adoption seen in high-fuel consuming applications such as trucks and ships. The study was couducted between September 2014 and March 2015.

“The fall of oil prices has diminished much of the glow from what was an overly optimistic market opportunity for natural gas in transportation,” said Michael Stoppard, IHS Energy chief strategist, global gas. “Nonetheless, the shift to greater use of gas in trucks is set to continue. It is widely accepted that power generation is the primary growth market for natural gas demand, but gas as a fuel offers a new market with potentially more value.”

The study notes that worldwide oil consumption in trucks is almost as high as in cars but also notes that it is often more economic for truck fleets to switch to alternative fuel sources. Truck fleets have a relatively quick turnover, which could lead to faster adoption of new technology, the study said.

IHS forecasts that gas demand in trucks will reach 81 billion cu m by 2030 and be split between LNG and CNG. An additional 17 billion cu m in LNG demand is expected to come from ships by that same year. LNG demand in the truck and marine sectors is expected to account for 10% of all globally traded LNG at that time.

“At a time of abundant LNG supply in search of insufficient markets, this extra demand could be critical for mitigating oversupply. Companies will need to adapt their business models to take advantage of the market opportunity,” said Rafael McDonald, the study’s project manager.