Morgan Stanley Issues Natural Gas as a Transportation Fuel Report
Natural gas vehicles, if they reach a “tipping point,” could alter the world outlook for oil and gas demand, says a new report from Morgan Stanley.
“Oil is still the dominant fuel for transportation, but natural gas is becoming competitive,” states the preface to Natural Gas as a Transportation Fuel: Energy Market Wild Card.
“With global natural gas resources now exceeding 240 years of consumption and gas prices at sharp discounts to oil in the U.S. and Europe, NGV popularity could grow. The technology is well developed, environmental benefits meaningful, and the economics attractive in many cases.
“If NGVs reach a ‘tipping point,’ this could alter the outlook for oil and gas demand,” the summary states. The Morgan Stanley analysts estimate gasoline-diesel displacement of 1.5 million to 4.5 million barrels per day over the next ten years – or, as much as 5.6 million barrels given a “Blue Sky” scenario.
Infrastructure Is Key
The report summarizes projects as wide-ranging as Waste Management and FedEx plans for natural trucks in the U.S. to the Shell-BOC initiative for LNG fueling between Melbourne and Sydney, Australia. It also touches on the potential for natural gas as a marine fuel, and for rail.
“The rollout of refueling infrastructure remains the most significant barrier,” Morgan Stanley says. Factors that could speed the adoption of NGVs include a reduction in the cost of equipment, government incentives, and better access to capital on the part of both fleets and fueling infrastructure providers.
Beneficiaries will include both NGV equipment and service providers, as well as large holders of natural gas resources, says the report, specifically naming Dresser-Rand, Chart Industries, Royal Dutch Shell, Gazprom, Reliance Industries and Santos.
Morgan Stanley drew on the expertise of personnel in London, Hong Kong, New York, Melbourne, Moscow and Mumbai for the 88-page NGVs document. Fleets & Fuels made a modest contribution as well.
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Source: Morgan Stanley with Fleets & Fuels follow-up