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New Study Says Natural Gas Poised for Growth in Transportation

A new study by IHS, business information provider, forecasts significant market growth and value for LNG as a transportation fuel. The study, LNG in Transportation: Challenging Oil’s Grip says that use of natural gas as a transportation fuel could displace more than 1.5 mbd of oil demand by 2030.
A combination of drivers—environmental, technological and commercial—will drive greater adoption of natural gas in transport, particularly in high-fuel use applications such as trucks and ships.

IHS forecasts that gas demand in trucks will reach 2,860 bcf by 2030 for both LNG and CNG. An additional 600 bcf in LNG demand is expected to come from ships by that same year. LNG demand in the truck and marine sectors is expected to account for 10 percent of all globally traded LNG at that time.

The study examines the impact of lower oil and fuel prices on the adoption of natural gas and finds that lower oil prices may slow adoption in the short term but unlikely to halt it. Much of the “launch pad for expansion” such as critical infrastructure is either in place or close to being in key markets such as the U.S. and China, awaiting a rebound in diesel prices, the study notes.

“The fall of oil prices has diminished much of the glow from what was an overly optimistic market opportunity for natural gas in transportation,” said Michael Stoppard, chief strategist for global gas—IHS Energy. “Nonetheless, the shift to greater use of gas in trucks is set to continue.”

The study also finds differences between drivers and market outcomes in key regions. However, in all regions the tax treatment of fuels will be critical in determining consumer choice especially as oil prices fluctuate, and a minimum level of fuelling infrastructure is essential to jumpstart adoption.

The IHS Multi-client study report LNG in Transportation: Challenging Oil’s Grip was conducted between September 2014 and March 2015. Parts of the study were officially presented on Wednesday, June 3 in Paris at the World Gas Conference.