Shell mulls LNG-hub network as ships and truck use rises

Firm studying developing a global network of liquefied natural gas supply hubs for vehicles

A tower flaring gas at an LNG processing plant operated by Shell in Nigeria. The firm is considering an LNG hub network as vehicles use of the fuel grows. Paul Carsten : Reuters
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Royal Dutch Shell, the oil company that spent more than US$50 billion to buy the 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, the executive vice president for gas and energy marketing and trading, said late Monday at the World Petroleum Congress in Istanbul.

Europe’s largest energy company acquired BG in 2016, gaining a 20 per cent share of the global LNG market with production facilities from Australia to the United States. 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 Monday, 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 important” than power generation, Mr 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, the chief executive Ben Van Beurden said in Istanbul  as he announced plans to invest as much as $1bn a year in its New Energies division by the end of this decade.

Total, Europe’s second-biggest energy producer, echoed the call to build demand. The French oil company, whose chief executive Patrick Pouyanne has said it is refocusing on gas, has been asked to construct gas-fired power plants in “some emerging countries,” said the senior vice president for gas Laurent Vivier.

"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 Monday signed a multi-year contract to supply LNG to a cruise ferry off France, the first such ship to be powered by the fuel.