Shell to Boost LNG Fuel Access in Louisiana, Ontario

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March 5, 2013

LNG-powered Offshore Supply Vessels like this one will support Shell’s operations in the Gulf of Mexico. Image courtesy of Harvey Gulf International Marine.

Royal Dutch Shell on Tuesday unveiled plans to build two small-scale liquefaction units in Ontario and Louisiana as the company looks to bring liquefied natural gas (LNG) fuel one step closer to its marine and heavy-duty on-road customers in North America.

“These two units will form the basis of two new LNG transport corridors in the Great Lakes and Gulf Coast regions,” Shell said in a statement.

Today’s announcement follows an investment decision in 2011 on a similar corridor in Alberta, Canada.

“Natural gas is an abundant and cleaner-burning energy source in North America, and Shell is leveraging its LNG expertise and integrated strength to make LNG a viable fuel option for the commercial market,” said Marvin Odum, President, Shell Oil Company. “We are investing now in the infrastructure that will allow us to bring this innovative and cost-competitive fuel to our customers.”

In the Gulf Coast Corridor, Shell plans to install a small-scale liquefaction unit (0.25 million tons per annum) at its Shell Geismar Chemicals facility in Geismar, Louisiana. Once operational, the unit will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana. To service oil and gas and other industrial customers in Texas and Louisiana, Shell says it is expanding its existing relationship with fuels and lubricants re-seller Martin Energy Services, a wholly-owned subsidiary of Martin Resource Management Corporation (MRMC). MRMC and its publicly traded affiliate, Martin Midstream Partners L.P. will provide terminalling, storage, transportation and distribution of LNG.

Shell added that it has a memorandum of understanding with Edison Chouest Offshore companies (ECO) to supply LNG fuel to marine vessels that operate in the Gulf of Mexico and to provide what is anticipated to be the first LNG barging and bunkering operation in North America at Port Fourchon, Louisiana. The LNG transport barges will move the fuel from the Geismar production site to Port Fourchon where it will be bunkered into customer vessels.

In the Great Lakes Corridor, Shell says it plans to install a small-scale liquefaction unit (0.25 million tons per annum) at its Shell Sarnia Manufacturing Centre in Sarnia, Ontario, Canada. Once operational, this project will supply LNG fuel to the entire Great Lakes region, their bordering U.S. states and Canadian provinces and the St. Lawrence Seaway. The Interlake Steamship Company is expected to be the first marine customer in this region, as it begins the conversion of its vessels.

Pending final regulatory permitting, the two new liquefaction units are expected to begin operations and production in about three years (2016).

Shell also said Tuesday that it is working to use LNG as a fuel in its own operations or to support its operations. The company said it has chartered three dual-fuel offshore support vessels (STX SV310DF) from Harvey Gulf International Marine utilizing Wärtsilä engine and LNG system technology, which will be used to support Shell’s operations in the U.S. Gulf of Mexico.

Shell added that it has also begun to transition many of its onshore drilling rigs and hydraulic fracturing spreads to LNG. These conversions can reduce fuel costs and local emissions.

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