Shale Gas and the Road Fuel Market

CNG Services Ltd Managing Director, John Baldwin, was invited by the All Party Parliamentary Group on Peak Oil and Gas (APPGOPO) to give a presentation on Shale Gas and the Road Fuel Market. The presentation, given yesterday (17th January 2012) at the House of Commons explained how Compressed Natural Gas (CNG) can reduce oil dependence in UK transport and reduce cost and CO2 emissions in this sector.

The model put forward is for the UK to develop a network of around 50 CNG stations on the high pressure, Local Transmission gas system (LTS) with easy access for vehicles along haulage routes, for example at motorway junctions. Each station would cost around £3 million for 4 compressors at each site (assuming £1 million land costs). However, each site could fill around 1,000 trucks per day so the network could fill a total of 50,000 trucks per day. This equates to a total CNG use of 1 billion kg per annum which is a saving of 3 million litres per day of diesel (60 litres per day, per truck) or 1 billion litres of diesel per annum.

Replacing diesel with CNG-diesel Dual Fuel vehicles fuelled from the LTS offers significant CO2 emissions savings. Depending on the ratio of diesel to CNG, the tail-pipe CO2 saving is between 15% (for 25% CNG) and 25% (for 75% CNG). The CO2 saving from using the LTS is an extra 18% compared to diesel, as there is no leakage of methane to get gas to the supply point, 80% less electricity needed for compression and no need to dry the gas. This gives a total CO2 reduction from Dual Fuel trucks supplied via LTS of around 30 - 40%. If the gas was sourced in the UK, for example from shale gas reserves, the CO2 savings would be even greater, compared to imported gas.

Cuadrilla estimates the Bowland Shale reserves to be about 200 tcf, of which about 20% is recoverable at today's prices. UK gas consumption is around 90 bcm so the Bowland Shale recoverable reserves could meet domestic consumer demand for around 25 years. This gas is worth around £350 billion of imported gas from abroad which could instead be invested into the renewables sector.

Political engagement is key to developing this sector so that gas suppliers consider this market and provide more support for UK manufacturers of dual fuel trucks. The request is for the Government to provide the tax breaks needed to develop CNG filling stations and vehicle gas storage tanks. Critically, there must be a CNG-diesel fuel duty differential that is fixed for 10 years in order for the market to establish itself and provide all the advantages it is capable of.