According to federal statistics, a gallon of diesel cost an average of $3.97 last year while the equivalent in natural gas cost 48 cents at industrial prices. This price does not reflect the costs of cooling the natural gas into a dense energy-packed liquid or the upfront costs of retrofitting BNSF’s fleet of approximately 6,900 locomotives. It is estimated that retrofitting a diesel locomotive and adding a tanker car could add 50% to a locomotive’s $2,000,000 price tag. In addition, the potential shift must be approved by federal regulators on fuel-tank safety and would require different fuel depots, special tanker cars, and training for depot workers.
Still, BNSF, a subsidiary of Warren Buffet’s Berkshire Hathaway, Inc., believes that natural gas has the potential to be significantly less expensive than diesel for years to come. In addition to the low price of natural gas fuel, BNSF is considering the switch because of recent Environmental Protection Agency air pollution standards for railroads that require diesel locomotives to have expensive emissions-control equipment by 2015.
BNSF’s pilot trains are expected to roll out in the fall of 2013. If the pilot program proves reliable and effective, retrofitting of existing locomotives could begin in the fall of 2014. BNSF is working with General Electric Company and Caterpillar, Inc. to develop a locomotive that can run on diesel and gas. Last September, Canadian National Railway Company (CNRC) retrofitted two locomotives to run on 90% LNG and 10% diesel. CNRC has indicated that it is “too early to determine if the pilot program was successful.”
Experts believe that it would take at least 5 years for gas-powered locomotives to be a significant presence on the rails. Nevertheless, the possible switch has created numerous discussions about increasing the use of natural gas in the transportation industry, including long-haul trucking and municipal bus fleets.
BNSF’s pilot trains are expected to roll out in the fall of 2013. If the pilot program proves reliable and effective, retrofitting of existing locomotives could begin in the fall of 2014. BNSF is working with General Electric Company and Caterpillar, Inc. to develop a locomotive that can run on diesel and gas. Last September, Canadian National Railway Company (CNRC) retrofitted two locomotives to run on 90% LNG and 10% diesel. CNRC has indicated that it is “too early to determine if the pilot program was successful.”
Experts believe that it would take at least 5 years for gas-powered locomotives to be a significant presence on the rails. Nevertheless, the possible switch has created numerous discussions about increasing the use of natural gas in the transportation industry, including long-haul trucking and municipal bus fleets.
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
