Shell will build LNG plant near Calgary

Ships like this could carry LNG from Shell's proposed facility in B.C. to Asian markets

Royal Dutch Shell intends to expand the use of liquefied natural gas as a fuel, starting with plans to build an LNG plant at Jumping Pound, near Calgary, Alberta. Shell will make the fuel available to heavy-duty fleet customers in Alberta starting next year. If approved, the investment will be the first of its kind globally for Shell. Previously, the company has relied on third-party suppliers of LNG to meet its requirements.

Shell is also seeking to expand its LNG business by creating a market for the fuel as a substitute for diesel and propane in a number of industry sectors. Shell notes that LNG is a cost-effective alternative to these other fuels and has the added benefit of reduced emissions.

Projects already underway include a joint cooperation agreement with Wartsila North America to accelerate the deployment in the marine industry of larger engines that use LNG as a fuel, and a cooperation agreement with General Electric Co.'s (GE) transportation division aimed at solutions for the railroad sector.

Global LNG capacity is expanding exponentially, as major companies move to create LNG infrastructure to keep up with growing power demand, especially from Asia.

Shell is also looking at working with Chinese, Korean and Japanese firms to build an LNG export facility on B.C.'s coast to serve the growing Asian market.

LNG is widely used among heavy industries and some mass transportation vehicles such as city buses, but it is not yet prevalent with passenger vehicles. Companies have been looking at the transportation sector as a potential new market for a commodity that has dwindled in price for the past several years.