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Woodside: LNG demand coming from transportation sector

The "next wave" of growth for super-cooled gas is coming from outside the consumer energy sector, analysts and industry leaders say.

By Daniel J. Graeber
Woodside: LNG demand coming from transportation sector
The transportation sector may be the source of new growth for liquefied natural gas, the head of Australian energy company Woodside said .File photo by Stephen Shaver/UPI. | License Photo

April 4 (UPI) -- New demand for liquefied natural gas could be coming in the form of growth in its use as a transportation fuel, the head of Australia's Woodside Energy said.

Woodside CEO Peter Coleman is in Japan addressing a regional gas conference. Island nations like Japan, and the emerging markets in Asia, are looking at gas and the super-cooled, and highly mobile, LNG as an alternative to conventional fuels. Japan in particular saw a dramatic rise in demand for natural gas after its Fukushima nuclear disaster.

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"Japanese investment has played a central role in our industry, underpinning the development of supply over several decades," Coleman told the audience.

A review of the Asian markets by the U.S. Energy Information Administration found the regional demand for gas is on the decline, however, because of slower economic growth, cooler weather and, for Japan, the resurgence of nuclear power.

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According to the EIA, demand for LNG in the Japanese market may be limited. With its weak economy, Japan's consumption of electricity has declined for five straight years.

Coleman, however, said new demand for LNG may be emerging in sectors outside consumer energy.

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"We anticipate the next wave of demand growth will come from the use of LNG as a transport fuel, in ships and on road and rail," he said.

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French energy company ENGIE moved early on the transition by signing an agreement in 2015 with the Japanese shipping company NYK to build vessels powered by LNG. The French energy company, working in cooperation with its Japanese and Belgian natural gas transmission operator Fluxys, took delivery of the first-ever bunkering vessel powered by LNG earlier this year.

Bunkering is the ship-to-ship transfer of fuel. With international regulations calling for fewer emissions in the transportation sector, the French company said LNG serves a unique niche.

In Europe, German utility group RWE said it would work with port officials to create infrastructure to fuel vessels with LNG and international regulators have called for new measures to facilitate the switch to LNG as a transportation fuel.

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"At Woodside, we are switching to LNG-fuelling of our own supply vessels and investing in infrastructure to provide LNG as a fuel to other industries and exporters," Coleman said.

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