EIA: Railroads expected to take on more LNG

With crude oil prices averaging higher than natural gas, the U.S. Energy Department said Monday it expects freight locomotives to start switching fuel sources.

The Energy Information Administration, the statistical arm of the Energy Department, said the U.S. freight railroad industry spent 23 percent of its operating expense on diesel fuel in 2012, the last full year for which data are available.

"EIA projects that liquefied natural gas will play an increasing role in powering freight locomotives in coming years," it said in a Monday briefing. "Continued growth in domestic natural gas production and substantially lower natural gas prices compared to crude oil prices could result in significant cost savings for locomotives that use LNG as a fuel source."

The railroad industry consumed 7 percent of all the diesel fuel used in the United States in 2012. From 2017 to 2040, EIA said it expects the sector to rely on LNG for 35 percent of its energy consumption.

Given the abundance of natural gas in the United States, EIA said increased consumption from the railroad sector would have a minimal effect on natural gas prices in the country.

[EIA]