BNSF Railway and Canadian National Railway have said they're testing modernized tender cars -- throwbacks to an earlier era when coal tender cars trailed steam locomotives.
India-based INOXCVA is building tender cars at its plant in Baytown, in a signal of an advancement in railway technology that is gaining traction.
INOXCVA CEO Parag Kulkarni said railways are testing the company's technology but declined to identify the customers.
Tender cars trail behind locomotives and provide them with fuel. A tender car carrying liquefied natural gas is more complicated than other types of refueling tanks, since it must vaporize the fuel and send the right quantity to the locomotive, Kulkarni said.
INOXCVA's technology can do exactly that, he said during a tour of the plant for attendees of the three-day World LNG Fuels 2014 conference that began Tuesday at the George R. Brown Convention Center.
"The math is very simple," he said. "You can cut down the cost of fuel by 50 percent."
Other estimates on the savings vary, but even slight differences in the cost of locomotive fuel can mean huge swings in expenses for rail companies.
Union Pacific Corp. alone spent $3.6 billion on fuel in 2012, according to filings with the U.S. Securities and Exchange Commission. Diesel, the fuel used most commonly in trains today, can cost up to $2 more per gallon than the equivalent quantity of liquefied natural gas.
The advantage of natural gas for railways was among the topics Encana Corp. CEO Doug Suttles discussed in his keynote address as the three-day conference got underway.
Railways could save a combined $1.8 billion in annual fuel costs, based on a savings of $1 per gallon, by switching from diesel to natural gas, Suttles said.
"Natural gas is ready, and it's ready now," he said.
Calgary, Alberta-based Encana has saved hundreds of thousands of dollars in annual fuel costs by making the same switch in its fuel for drilling rigs and hydraulic fracturing equipment, he said. The company will save at least $200,000 annually if it uses only liquefied natural gas delivered from trucks, but could save up to $1.5 million if it uses only natural gas tapped directly from wellheads, Suttles said.
Half of the company's rigs now run on natural gas, a switch initially prompted by environmental regulations that forced the company to cut emissions.
Kulkarni, the INOXCVA CEO, said progress on fueling train locomotives with natural gas has been slow because regulators have yet to weigh in on safety issues related to the tender cars. The fuel transition is in motion, however, driven by the economics of natural gas, he said.
Because technology for liquefied natural gas tender cars is evolving, workers drew a curtain across the length of the plant Tuesday to conceal the work and protect INOXCVA's research and development. INOXCVA turned visitors' focus to its refueling systems for long haul trucks running on natural gas.
Although some energy companies have started moving water and sand to oil fields on trucks powered by natural gas, refueling those vehicles can be a challenge. INOXCVA's solution: truck in a tank of liquefied natural gas and hook it up to a portable refueling pump.
The systems, developed at the company's Baytown plant, could be ideal for hydraulic fracturing operations, which require high volumes of truck deliveries in one area, before moving to other locations, said Tim Miller, president of INOXCVA's North America division, which employs about 400 people in the Houston area.
If energy companies use the INOXCVA mobile refueling systems, they can set up portable refueling pumps that can be supplied by LNG trucks, Miller said.
Then, when the drilling operations move elsewhere, figuring out a refueling option at a new well site won't be a problem, he said.
"They can take it with them," Miller said.
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