Wyoming Lng Roadmap
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WYOMING LNG ROADMAP April 2014 Prepared by www.gladstein.org The information contained in this report was prepared on behalf products, process, or service by trade name, trademark, 2 __ of the State of Wyoming and a consortium of private industry manufacturer, or otherwise, does not necessarily constitute or stakeholders by the professional environmental consulting imply its endorsement, recommendation, or favoring by the firm of Gladstein, Neandross & Associates (Santa Monica, State of Wyoming or Gladstein, Neandross & Associates. California; Irvine, California; and New York City, New York). The opinions expressed herein are those of the authors and do No part of this work shall be used or reproduced by any means, not necessarily reflect the policies and views of the State or its electronic or mechanical, without first receiving the express industry partners. Reference herein to any specific commercial written permission of Gladstein, Neandross & Associates. WYOMING LNG ROADMAP ACKNOWLEDGEMENTS The development of this report for the State of Wyoming Governor Matt Mead was performed under the leadership of various State State of Wyoming agencies and a coalition of private-sector co-sponsors. Key individuals who assisted with the initiation and preparation Office of Governor Matt Mead of this report are noted below. Rob Hurless, Energy Strategy Advisor to Governor Mead Wyoming Business Council Robert Jensen, Chief Executive Officer ABOUT THE AUTHORS This report was authored by Gladstein, Neandross & Many individuals from GNA made significant contributions to Associates (GNA). With multiple offices in California and the complete process to prepare this report. GNA’s primary New York, GNA is North America’s leading full-service contributors to this report include: professional consulting firm specializing in market development of alternative fuel technologies for the on- Jonathan (Jon) Leonard, Senior Vice President road and rapidly developing off-road high horsepower (lead author / editor) sector where natural gas is increasingly being used in [email protected] | 949-852-7390 locomotive, commercial marine, mine haul, and oil and gas exploration and production applications. GNA provides Erik Neandross, Chief Executive Officer (author / editor) comprehensive market research and reporting, strategic [email protected] | 310-573-8553 planning, financial modeling and expert technical assistance to its clients. Typical project development work includes Karen Mann, Senior Vice President LNG fuel station and/or production plant sizing, design, [email protected] | 310-573-8546 layout, and specifications; permitting and safety training; fueling infrastructure and fuel procurement; and overall Ryan Erickson, Senior Project Director project costing and management. For 20 years, GNA has [email protected] | 310-573-8551 been working on large over-the-road truck projects with fleets such as Waste Management, UPS, Frito-Lay, Ryder, Patrick Couch, Project Director City of Los Angeles, and many others, and has helped to [email protected] | 949-852-7391 spearhead the development of several natural gas corridor projects including the ICTC and Texas Triangle projects. In Melissa Wake, Senior Associate the last few years, GNA has become increasingly engaged [email protected] | 949-852-7393 in multiple off-road high horsepower projects working to transition to LNG, including work with the Class I railroads, Miriam Aguillares, Associate several large commercial marine projects, oil and gas drilling [email protected] | 949-852-7392 3 and fracking applications, and large mine haul trucks. In __ addition to its consulting services, GNA produces two of the Katherine Engel, Associate nation’s leading conferences on these topics—Alternative [email protected] | 310-573-8548 Clean Transportation (ACT) Expo, North America’s largest alternative fuels and clean vehicle technologies show, and Tan Grimes, Creative Manager the Natural Gas for High Horsepower (HHP) Summit. For [email protected] | 310-573-8561 more information, visit www.gladstein.org. TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................. 10 Overview ................................................................................10 Study Origin and Objective ................................................................10 Summary of Key Study Findings............................................................11 Study Conclusions and Recommendations ..................................................13 1. BACKGROUND AND INTRODUCTION . 14 1.1. Study Objective........................................................................15 1.2. Wyoming’s Energy Economy and Business Environment ..................................15 1.2.1. World-Class Energy Production...................................................15 1.2.2. Energy-Related State GDP Contributions .........................................16 1.2.3. Energy-Related State Revenue Streams ..........................................17 1.2.4. Demographics, Land Use and Business Environment ..............................19 1.3. Wyoming Air Quality...................................................................19 1.4. Project Origin, Objectives and Co-Sponsors .............................................22 1.4.1. Governor’s Action Plan for Energy, Environment and Economy ......................22 1.4.1. Project Co-Sponsors . 23 2. OVERVIEW OF NATURAL GAS IN HHP APPLICATIONS . 24 2.1. Economics ...........................................................................24 2.1.1. Incremental Capital Costs........................................................25 2.1.2. Fuel Price and Cost Savings.....................................................25 2.2. Technological Approaches to Vehicle and Equipment Conversion .........................27 2.3. Manufacturer Momentum with Natural Gas Products .....................................29 2.4. Air Quality Implications of Switching to Natural Gas.......................................31 2.4.1. Criteria Pollutant Emissions ......................................................31 2.4.2. Greenhouse Gas Emissions ....................................................32 2.5. Expected Growth Trends ..............................................................34 3. CURRENT OPERATIONS AND INVENTORIES IN KEY WYOMING SECTORS................... 35 3.1. Mining Operations: Large Haul Trucks ...................................................35 4 __ 3.1.1. Overview of Mine Haul Trucks....................................................35 3.1.2. Estimated Inventory and Diesel Fuel Usage .......................................37 3.2. Rail Operations: Freight Locomotives ...................................................41 3.2.1. Overview of Wyoming Rail Operations............................................42 3.2.1.1. Burlington Northern Santa Fe Railroad .....................................45 3.2.1.2. Union Pacific Railroad....................................................46 WYOMING LNG ROADMAP 3.2.2. Estimated Inventory and Diesel Fuel Usage ......................................49 3.3. Oil & Gas Operations: Drill Rigs and Pressure Pumping Services...........................49 3.3.1. Overview of Wyoming Operations ...............................................49 3.3.1.1. Drill Rigs ................................................................50 3.3.1.2. Pressure Pumping Operations ...........................................52 3.3.2. Estimated Inventory and Diesel Fuel Usage ......................................53 3.4. Heavy-Duty On-Road Truck Operations .................................................54 3.4.1. Overview of Heavy-Duty Trucking in Wyoming ....................................54 3.4.1.1. Line-Haul Trucking in Wyoming ............................................56 3.4.1.2. Heavy-Duty Trucks Supporting Wyoming HHP Activities .....................57 3.4.2. Estimated Inventory and Diesel Fuel Usage ......................................57 3.5. Off-Road Operations: Other Large Vehicles and Equipment ...............................58 3.5.1. Overview of Wyoming’s Off-Road Sector..........................................58 3.5.2. Estimated Inventory and Diesel Fuel Usage ......................................59 3.6. Summary of Inventory and Fuel Usage Estimates for All Sectors ...........................60 4. SWITCHING TO NATURAL GAS: ACTIVITIES AND OPPORTUNITIES ......................... 62 4.1. Mine Haul Trucks......................................................................62 4.1.1. Existing Efforts and Plans for Natural Gas Deployments .............................62 4.1.2. Summary of Opportunity for Life-Cycle Cost Savings ...............................65 4.2. Oil and Gas E&P......................................................................66 4.2.1. Existing Efforts and Plans for Natural Gas Deployments.............................66 4.2.1.1. Drill Rigs ................................................................69 4.2.1.2. Pressure Pumping Services (PPS) .........................................71 4.2.2. Summary of Opportunity for Life-Cycle Cost Savings ..............................73 4.3. Locomotives .........................................................................75 4.3.1. Background and Historical Usage of LNG in U.S. Rail Sector ........................75 4.3.2. Existing Efforts and Plans for Natural Gas Deployments ............................76