After Oil, Natural Gas May Be Next On North American Rails

Transporting gas by rail, most likely as cryogenic liquefied natural gas (LNG), faces obstacles. The technology is in its infancy, and so far no tank car is permitted to carry the fuel on U.S. rails. Nor are there enough plants that convert natural gas to LNG to support a robust gas-by-rail market, experts said.

More-volatile liquids like ethylene and propane already travel on the rails in growing volumes. But as concerns about the safety of crude by rail intensify, regulators are exercising extreme caution with uncertified fuels like LNG, said executives involved in developing the technology.

Stressing that it is too early to say, many of the major Class 1 railroads that have embraced crude by rail declined to speak about specific plans for gas by rail. Calgary-based Canadian Pacific Railway Ltd, for example, was just "monitoring any discussions in this area," a spokesman said.

Breitling Energy Corp CEO Chris Faulkner said he and other gas producers were discussing the idea, but his company was not considering it.

"I can only imagine the amount of pushback we're going to have on transporting gas by rail," Faulkner said. "The discussion isn't about safety and fact, it's about fear."

But as railroads team up with companies like General Electric Co and Caterpillar Inc to develop technology to run locomotives on LNG, many say that hauling the fuel as cargo is the next step as a drilling revolution transforms North American energy markets.

"A Lot Of Money"

LNG, natural gas cooled and shrunk to a liquid for shipping, already powers heavy-duty trucks and boats in the United States and Canada. A network of fueling stations is cropping up with backing from the likes of Royal Dutch Shell Plc and Clean Energy Fuels Corp.