Shell announced today that they are going to build two new LNG liquefaction plants in North America, not for export, but for domestic consumption as a motor fuel. The two plants, one in Louisiana and one in Ontario Canada will provide LNG fuel for shipping and heavy onshore vehicles, including much of Shell’s E&P drilling rigs and support vehicles. According to the press release the two plants will produce about 250k tons per year each and the product will be distributed via partners along the Gulf Coast and Great Lakes regions. They are also currently building out and LNG fuel system in Alberta Canada which was announced in 2011.
Though the two facilities are dwarfed by the Sabine Pass project being developed by Cheniere which has a capacity of 18m tons per year, that project is designed for export. If Shell is successful at creating a solid market for LNG in transport in North America, it could spur additional development of LNG as a viable motor fuel and start to further shave some of the excess gas production capacity off the market over the next 5 to 10 years and in the process help reduce diesel and bunker fuel related emissions.