Clean Energy sets sights on building an LNG terminal in Jacksonville

In another sign of the emerging—and potential—role of natural gas in freight transportation, Clean Energy Fuels Corp., the largest provider of natural gas fuel for transportation in North America, said late last month that it aims to build a Jacksonville, Fla.-based liquefied natural gas (LNG) terminal.

Clean Energy officials said the company placed a purchase order contract on a Jacksonville area property on the St. Johns River that would be the initial LNG facility on the Eastern seaboard that would serve as an LNG provider for maritime, heavy-duty trucking, and rail sectors and would be able to produce roughly 300,000 gallons of LNG per day to support projected gains in maritime and rail usage by shippers and augment LNG supplies for southeastern-based trucking fleets. 

Clean Energy is currently in “Open Season” and working with customers to secure the facility’s remaining available capacity, according to company officials.  Construction for the facility is anticipated to begin in the second quarter of 2014 and is estimated to be completed in the fourth quarter of 2015.

“Clean Energy is responding to industry demand for LNG fuel for high-horsepower applications such as fueling long-haul trucks and cargo ships,” said Greg Roche, vice president of national accounts, Clean Energy, in an interview. “Jacksonville-based shipping companies have placed orders for LNG-fueled ships and there are currently no LNG fueling facilities to service them—we intend to meet that need.  This has become increasingly important as the shipping industry has begun to prepare for the 2015 enforcement of the North American Emission Control Area, which effectively bans the use of bunker fuel within 200 miles of the United States.”

Roche added that this effort is the latest part of Clean Energy’s strategic plan to build the nation’s gas fueling infrastructure to enable fleets—trucking, maritime, or rail—to realize the benefits of fueling with cleaner, cheaper, and abundant natural gas.

What’s more, the average price per gallon of diesel fuel currently stands at $3.897, according to the Department of Energy’s Energy Information Administration, while natural gas currently stands at $3.55/million British thermal units (MMBtu).

While this spread is not as wide as it has previously been as diesel prices have fallen in recent weeks, Roche explained that the biggest benefit of this terminal for freight transportation providers would be the competitive cost advantage they would maintain against their competitors using more costly and dirtier diesel fuel. 

“We’re seeing shippers increasingly requiring their haulers to use natural gas because of these cost savings that in-turn are passed along to them,” Roche noted.  “Shippers are also using natural gas fueling as a way to meet aggressive corporate sustainability goals in a cost-effective manner.  The Jacksonville project would enable freight transportation providers to remain competitive in today’s challenging logistics landscape.”

Kevin Smith, president and CEO of Sustainable Supply Chain Consulting, said that this initiative appears to be an interesting development primarily because ships intend to use LNG as a primary fuel in the Caribbean shipping lanes.

“LNG produces far less carbon emissions than conventional bunker fuels,” he said. “The same can be said for LNG being used as a fuel for trucks and rail road operations. I am sure that this is a strategy to get ahead of regulatory requirements…and is probably a good one. Cleaner energy and cleaner burning fuels are needed to meet ever-tightening EPA requirements.”

The primary challenge for this terminal, according to Smith, will be creating a usable network of refueling stations for trucks, explaining they cannot be paced too far apart or you run the risk of disabling power units.

“Rail may not be so tough to solve since trains have to stay on the rail line,” he said.  “Ships only refuel in port, so this may be a big breakthrough.”