State considers lifting ban on LNG facilities

ALBANY -- In the four decades since 40 workers were killed by an explosion in a 108-foot-tall liquefied natural gas tank in Staten Island, New York has banned construction of such facilities.

It wasn't a major issue over the years, without much demand for the fuel that's created by chilling natural gas to an extremely low temperature to a liquid state. The state's three existing LNG storage facilities, built on Long Island in the 1960s, remain in operation, exempt from the ban.

Now things have changed. Demand is rising as trucking companies switch from diesel fuel to LNG, which doesn't produce the toxic fumes in diesel exhaust that are associated with smog, asthma, lung cancer and other health problems. It's also much cheaper than diesel because the abundance of natural gas produced by hydraulic fracturing in shale formations has driven prices to near historic lows.

New York's ban puts up a roadblock as companies, including Royal Dutch Shell PLC, General Electric Co. and Clean Energy Fuels, build out a nationwide network of LNG fueling facilities.

The Department of Environmental Conservation has drafted regulations, expected to be finalized by early next year, that will allow LNG truck-fueling stations and other types of LNG storage plants. The agency estimates that about 21 fueling stations will be built over the next five years.

Some environmental groups oppose letting LNG facilities in, citing concerns about safety and methane emissions. New Yorkers Against Fracking calls the regulations a backdoor attempt to get the infrastructure in place for shale gas development, which has been banned since the state began an environmental review of it in 2008.

The state Motor Truck Association says major fleet operators that have switched to LNG are realizing savings of $1 to $3 per diesel equivalent gallon. UPS is now operating 59 LNG trucks between its southern California and Las Vegas depots and more than 1,000 natural gas trucks nationwide. Lowe's Cos. has launched a fleet of LNG trucks in Texas and says its goal is to replace all fleets with natural gas trucks by the end of 2017.

Natural gas has been used as a truck and bus fuel for many years but as compressed gas rather than liquid. Compressed natural gas is good for vehicles that return to a central hub to slowly refuel overnight, like garbage trucks and municipal buses, but is impractical for long-haul trucks. Tractor-trailers can't carry enough compressed gas to go long distances, and refueling is slow. Liquefied natural gas is higher in energy and flows into the gas tank as fast as diesel.

The main obstacles to increasing use of LNG by long-haul freight companies are the cost of specialized trucks with double-walled tanks, which can cost $10,000 more than diesel trucks, and scarcity of fueling stations.

According to the U.S. Department of Energy, there are now 81 LNG fueling stations in 14 states, with more than half of them in California and the rest primarily west of the Mississippi. But the number is poised to rise significantly in the next few years.

Shell has announced plans to build LNG fueling facilities at up to 100 TravelCenter and Petro truck stops along interstate highways.

Clean Energy Fuels, co-founded by billionaire T. Boone Pickens, is installing LNG fueling tanks at Flying J truck stops coast to coast. Among the planned fueling stations listed on Clean Energy's website are two in New York: in Rotterdam, about 20 miles west of Albany, serving the Interstate 88 corridor, and Pembroke, along Interstate 90 in western New York. They will need state permits under the new regulations.