Shell Mulls LNG-Hub Network as Use by Trucks Expands

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Royal Dutch Shell, the oil company that spent more than $50 billion to buy natural-gas producer BG Group, is looking to expand demand for the fuel in transport to ensure its output is consumed.

Shell is studying developing a global network of liquefied natural gas supply hubs for vehicles including ships, Steve Hill, executive vice president for gas and energy marketing and trading, said June 10 at the World Petroleum Congress in Istanbul.

Europe’s largest energy company acquired BG in 2016, gaining a 20% share of the global LNG market with production facilities from Australia to the U.S. Output of the fuel has grown as rising energy use — particularly in Asia — boosts the drive to find alternatives to coal. By developing supply hubs, Shell, which announced a ramp-up in clean energy investment on June 10, could feed the heavy-truck and marine vessel markets, increasingly important to LNG producers that traditionally serve the power sector.

“As the demand from transportation grows, that will become more important” than power generation, Hill said. “In the foreseeable future, over half of demand won’t come from electricity but from heavy-duty transport, trucking for roads and marine, use in chemicals.”

Shell sees opportunities in LNG and next-generation biofuels for shipping, heavy freight and air travel, CEO Ben Van Beurden said in Istanbul June 10 as he announced plans to invest as much as $1 billion a year in its New Energies division by the end of this decade.

Total SA, Europe’s No. 2 energy producer, echoed the call to build demand. The French oil company, whose CEO Patrick Pouyanne has said it’s refocusing on gas, has been asked to construct gas-fired power plants in “some emerging countries,” Senior Vice President for Gas Laurent Vivier said in Istanbul.

“Creating new demand is critical,” he said. “We will at some point” consider building new power stations, he said.

Total’s marine-fuels division on June 10 signed a multi-year contract to supply LNG to a cruise ferry off France, the first such ship to be powered by the fuel.