Wyoming teams with industry on LNG report

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CHEYENNE, Wyo. (AP) - Wyoming could benefit from private development of a liquefied natural gas production and distribution system to supply mining operations, railroads and other heavy industrial users, according to a new report.

Gov. Matt Mead on Monday released the report commissioned by the state and a number of private energy companies.

It states that investing up to $400 million to develop a liquefied natural gas system primarily serving the state’s coal-producing Powder River Basin region could result in $166 million annual fuel savings versus continued use of diesel fuel.

The report states industrial users including on-road semitrailers are now burning over 630 million gallons a year of diesel in Wyoming.

Mead announced the report in a news conference at the state Capitol in Cheyenne. He said it fits into his administration’s development of a state energy policy. Wyoming is the nation’s leading coal-producing state and also a top producer of natural gas and other resources.

“It’s a great opportunity for coal companies to lower their costs and also use a product that we have in abundance in Wyoming,” Mead said.

The investment would create thousands of high-paying jobs in Wyoming, Mead said.

“We recognize also, that in doing this - finding high-horsepower applications for LNG - we can create another sector for the energy sector that builds new jobs, builds manufacturing, maintenance,” Mead said.

Richard H. Oates, vice president of the Wyoming Machinery Company, which sells Caterpillar heavy equipment, said liquefied natural gas offers a chance for customers who currently use diesel a chance to reduce their ownership costs.

“Abundant domestically produced natural gas offers lower fuel costs and reduced emissions,” Oates said. “Today, there are proven technologies available for using natural gas and liquefied natural gas to burn in engines.”

Work is underway to develop ways to retrofit existing diesel engines in machinery such as heavy haul trucks at coal mines and locomotives with new technology that would allow them to burn either a blend of diesel and liquefied natural gas or pure liquefied natural gas, Oates said.

Renny MacKay, spokesman for Mead, said the state put up $90,000 for its share of the report while the rest of the money came from industrial partners. The state worked with a dozen private companies, including Encana and Anadarko Petroleum, on the study.

The report was prepared by energy consulting company Gladstein, Neandross and Associates.

Erik Neandross, chief executive officer of the company, said he expects liquid natural gas technology will be widely available in a few years for such applications as mine haul trucks, drilling rigs and locomotives.

“That’s the exciting part for us, you think about mining coal with natural gas, reducing your costs by 25 or 50 percent,” Neandross said. “Your fuel cost gets reduced. You put that coal on a train that motors down the rail to the customer. That reduces costs by 50 percent. That makes Wyoming coal more competitive on costs. It’s a great win-win, reducing costs and making Wyoming more competitive.”

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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