Roughly 16 years after Burlington Northern, now BNSF Railway, took its two natural gas-powered locomotives off the tracks, railroads are giving the fuel another look.
But North America’s largest railroads, facing less of an impact from volatile and overall rising diesel costs, appear to be moving more cautiously than some truckers. And the industry as a whole is in no rush to spend hundreds of millions of dollars after investing in more fuel-efficient, less-polluting locomotives to meet U.S. emissions rules that took effect last year.
Kitting a locomotive costs 20 to 40 percent of the engine price, an expensive move on top of a locomotive price tag of $1.7 million to $3 million, depending on power, fuel efficiency and emissions output.
“The last time people looked, the engines were less mature and (natural gas) prices were a lot higher,” said Paul Blomerus, senior director of the high horsepower division at Westport Innovations, which partners with vehicle and engine manufacturers to produce natural gas engines. “They thought, ‘Why would I do risky things that don’t have a good payback?’ ”
Now those engines are more efficient and natural gas prices are lower, and even more stringent emissions rules will come in 2015. These factors are likely causing railroads, particularly Canadian National Railway, to rethink prior assumptions about natural gas fuel. Westport and locomotive manufacturer Electro-Motive Diesel are outfitting two CN locomotives with a natural gas-powering system. The duo is using high-pressure, late-injection technology, while Energy Conversions is kitting two other CN locomotives with low-pressure, direct-injection equipment.
Chesapeake Energy, the second-largest natural gas producer in the U.S., also wants in. Chairman and CEO Aubrey McClendon in March said the company partnered with Caterpillar and General Electric to build natural gas locomotives, according to Platts. The Oklahoma City-based company plans to introduce the technology this summer.
Blomerus said fuel savings could help recoup the cost of kitting a diesel locomotive with a natural gas system in two to three years. With locomotives needing an overhaul every six or seven years, the prospect of switching power sources becomes more attractive. Other Class I railroads, including CSX, BNSF and Union Pacific, said they are monitoring natural gas-powered technology but believe diesel-powered locomotives are still the best option. The BN merger with Santa Fe and the fact the equipment had become dated spurred the railroad in the mid-1990s to pull its two natural gas locomotives from a coal route from Montana to northern Minnesota.
“The railroads don’t want to talk about it,” said Les Olson, who led the BN conversion as the railroad’s director of energy research and development. “Shippers will want natural gas and scream to the (Surface Transportation Board that the railroads) should be providing power for a lot cheaper.”
A much-cited 2007 study by BNSF, UP, the Association of American Railroads and California Environmental Associates throws cold water on the economic feasibility of natural gas-powered locomotives, unless used for switchyard operations. A finding of the reverse likely would have led California regulators to order western railroads to adopt the technology.
Natural gas prices are roughly 60 percent cheaper today than when the study was completed. To produce and distribute a million British thermal units of energy for locomotive use, it cost roughly $9 in natural gas, compared with about $24 in diesel fuel, Olson said.
But there’s more to the equation than fuel cost. A fleet of natural gas locomotives could lose operating efficiencies, and the needed tender cars would add weight to the train, raising operating costs, according to the study.
There is also the matter of setting up a fueling infrastructure. Hypothetically, a shipper or a third party could provide the latter. But that still creates a “chicken or the egg scenario,” in which no one wants to build fueling stations unless there are natural gas locomotives, and vice versa, said Olson, an associate research scientist at the Texas Transportation Institute.
“I think everyone wants to play,” he said, “but few understand the dynamics.”