Preparing for LNG by Rail Tank Car: A Readiness Review (2022)

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13 Natural gas has been shipped as liquefied natural gas (LNG) by marine vessel and cargo tank motor vehicles for decades. This chapter provides an overview of the LNG facilities where these shipments originate and terminate and discusses the types of containers used to move the shipments by truck, train, and ship. It concludes with an overview of natural gas and LNG commodity flows in the United States and considers the potential future demand for shipping LNG by rail. OVERVIEW OF LNG FACILITIES Natural gas is primarily transported by pressurized pipelines in the United States. The gas pipeline network is vast, consisting of hundreds of thou- sands of miles of gathering lines from field wells to gas production facilities, transmission lines used for long-distance transportation, and distribution systems used to serve end users. However, a relatively small portion of the natural gas produced is also super-cooled to a liquid for storage and trans- portation by ship, truck, and train. When liquefied, natural gas is reduced to 1/600 of its original gaseous volume and to half the weight of water, enabling the other modes to transport shipments economically between locations lacking connecting transmission pipelines. Figure 2-1 shows the extent of the natural gas transmission pipeline network in the continental United States. Note that the network is densest in the Midwest and Gulf of Mexico regions. New England stands out as a heavily populated area hav- ing few pipelines, and thus it is more dependent on gas shipments by truck and ship in the form of LNG. 2 Background on Liquefied Natural Gas Shipping and Facilities

14 PREPARING FOR LNG BY RAIL TANK CAR FIGURE 2-1 U.S. natural gas transmission pipeline system. SOURCE: Pipeline and Hazardous Materials Safety Administration.1 LNG transportation typically starts or ends at an LNG facility, where gas is liquefied for storage and transportation or where LNG is regasified for use. The three main facility types are peak-shaver plants, import/export terminals, and mobile and satellite facilities. See Figure 2-2 for a map of the location of these facilities in the continental United States as of August 2021.2 Peak-shaving plants store LNG in preparation for times of peak gas demand, such as for heating during winter or air conditioning during summer. In general, these plants are small-scale liquefaction facilities that receive natural gas by pipeline, liquefy it to LNG, and store the liquid until needed. When demand requires, the LNG is regasified to distribute through the pipeline network or the LNG transported by truck for regasification onsite by end users. These plants are capable of producing about 100,000 gallons of LNG per day and storing up to 2 million gallons. They are the most common type of LNG facility; there are 69 plants in 26 states. The largest LNG facilities in the United States are the 12 import/export terminals that are located mostly on the Gulf Coast. With the large increase 1 Pipeline and Hazardous Materials Safety Administration, National Pipeline Mapping Sys- tem, “Data Visualization Overview,” https://www.phmsa.dot.gov/data-and-statistics/pipeline/ data-visualization-overview. 2 Annual Reports to PHMSA for in-service and retired plants and the National Pipeline Mapping System as of August 2021, https://www.phmsa.dot.gov/data-and-statistics/pipeline/ source-data.

BACKGROUND ON LNG SHIPPING AND FACILITIES 15 FIGURE 2-2 U.S. LNG facilities (August 2021). SOURCE: Pipeline and Hazardous Materials Safety Administration.3 in domestic natural gas production over the past decade, many of these coastal facilities that were once used for imports have been repurposed for export trade to Asia and Europe. Export terminals depend on pipelines to supply natural gas for liquefaction. Large-scale facilities can store up to 205 million gallons of LNG.4 It merits noting that terminals in New England and Puerto Rico lack access to pipelines and are used exclusively for receiving LNG. Smaller satellite (e.g., merchant plants) and mobile facilities are the third most common type of LNG facility. They receive the LNG by truck, temporarily store it, and regasify it for local distribution. Some remote industries such as mining and agriculture depend on service from satellite facilities because they lack access to pipelines. LNG from these facilities can be a temporary solution for new businesses that are waiting to connect to a pipeline network or for a utility to keep serving customers when a line is being repaired or maintained. In addition, commercial and industrial 3 Pipeline and Hazardous Materials Safety Administration, “Gas Distribution, Gas Gather- ing, Gas Transmission, Hazardous Liquids, Liquefied Natural Gas (LNG), and Underground Natural Gas Storage (UNGS) Annual Report Data,” https://www.phmsa.dot.gov/data-and- statistics/pipeline/gas-distribution-gas-gathering-gas-transmission-hazardous-liquids. 4 Cheniere Energy, “Sabine Pass LNG Facility Currently Stores 17 Bcfe in 5 Tanks,” https:// www.cheniere.com/where-we-work/sabine-pass.

16 PREPARING FOR LNG BY RAIL TANK CAR users may depend on such stored LNG as a backup fuel source for power generation. Finally, LNG storage facilities provide transportation fuel for some gas-powered trucks, locomotives, and ships. Because they receive LNG by truck, satellite and mobile facilities are often located along main highways. In August 2021, there were 38 satellite facilities in 16 states, with approximately half in New England. Of the 39 mobile facilities, 25 were in California and 12 in Massachusetts.5 EXPERIENCE SHIPPING LNG BY RAIL To date in the United States, two railroads have received authorization to transport LNG by intermodal portable tanks, and one shipper has received a special permit to transport LNG in a rail tank car. Internationally, several countries have also tested or approved moving LNG by rail, but only Japan has had a long-standing commercial application of LNG by rail. Domestic Shipping of LNG by Rail The first U.S. railroad to receive approval to transport LNG was the Alaska Railroad Corporation (ARRC), as part of a demonstration project. In 2015, the Federal Railroad Administration (FRA) approved the railroad’s request to move LNG in UN-T75 portable tanks, a type of intermodal container. LNG demonstration tests began the following year with two 40- foot portable tanks of this type. Shipments along a 350-mile route between Anchorage and Fairbanks were made without incident; however, the service ended when the demonstration project period expired in 2017.6 In June 2021, FRA extended approval of ARRC’s LNG service through December 31, 2022.7 The Florida East Coast Railway (FEC) received approval from FRA in 2017 to use LNG for fuel and to transport it as cargo in UN-T75 portable tanks between Miami and Port Everglades. With approval from FRA, FEC subsequently expanded the service between Jacksonville and Port Canav- eral, Jacksonville and Fort Lauderdale, Miami and Port Canaveral, and Miami and Port of Palm. The rail service, which remains in operation, is used to supply LNG to markets in the Caribbean islands.8 5 Pipeline and Hazardous Materials Safety Administration LNG Facility Siting, https://www. phmsa.dot.gov/pipeline/liquified-natural-gas/lng-facility-siting. 6 Alaska LNG Demonstration Project, https://www.alaskarailroad.com/sites/default/files/ communications/2016_LNG_Transport_Demo_Project.pdf. 7 Federal Railroad Administration to ARRC, “Letter of Approval,” June 21, 2021, https:// downloads.regulations.gov/FRA-2021-0064-0001/attachment_1.pdf. 8 Federal Railroad Administration to Florida East Coast Railway, “Letter of Approval,” May 1, 2018.

BACKGROUND ON LNG SHIPPING AND FACILITIES 17 In December 2019, the Pipeline and Hazardous Materials Safety Ad- ministration (PHMSA) issued a special permit to Energy Transport Solu- tions (ETS) to ship LNG in the DOT-113C120W, a design variant in the DOT-113 family of cryogenic tanks cars. The special permit allowed ETS to ship LNG by tank car from Wyalusing, Pennsylvania, to Gibbstown, New Jersey. However, the permit expired on November 30, 2021, before any movements commenced.9 International Shipping of LNG by Rail In 2001, Japan was the first country where LNG was transported by rail. The country is one of the largest importers and users of LNG in the world.10 It imports LNG by tanker ship at two ports, where the product is unloaded into storage tanks, transferred to coastal vessels to supply other ports, or regasified for pipeline distribution. Shipments are also transported by rail and truck to remote locations not served by pipelines. Transport Canada authorized shipping LNG by rail in 2014, while several countries in Europe have also conducted tests and trial runs of LNG rail service. In 2018, Transport Canada approved the TC-113C120W cryogenic tank car (which is the same as the DOT-113C120W) for LNG.11 However, as of June 2022, there was no demand for the service.12 Enagás, which operates an LNG terminal in Spain, led a pilot project in 2018 that arranged to transport LNG portable tanks by truck, rail, and ship between Huelva and Melilla.13 While Enagás has not transported LNG by rail since 2018, it plans to do so in the future as it is building an LNG bunkering facility for ships at the Port of Algeciras to serve the Strait of Gibraltar shipping lanes.14 In 2021, several companies in France and Germany also 9 Special Permit 20534, https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/safe- transportation-energy-products/72911/environmental-assessment.pdf. 10 International Trade Administration, “Liquefied Natural Gas,” January 7, 2022, https://www. trade.gov/country-commercial-guides/japan-liquefied-natural-gas-lng; International Energy Agency, https://iea.blob.core.windows.net/assets/3470b395-cfdd-44a9-9184-0537cf069c3d/ Japan2021_EnergyPolicyReview.pdf. 11 Transport Canada, “Containers for Transport of Dangerous Goods by Rail, a Transport Canada Standard,” January 2018, https://tc.canada.ca/sites/default/files/2021-06/tp14877_ en.pdf. 12 Transport Canada, “Containers for Transport of Dangerous Goods by Rail,” TP14877E, January 2018, https:/tc.canada.ca/sites/default/files/2021-06/tp14877_en.pdf; Call with Trans- port Canada staff, Dangerous Goods Division, December 2021. 13 Offshore Energy, https://www.offshore-energy.biz/spain-pilots-lng-supply-by-road-rail- and-sea. 14 “Spain’s Enagás signs joint venture deal for building and charter of LNG bunkering vessel at Algeciras Port,” LNG Journal, accessed June 2022, https://lngjournal.com/index.php/latest- news-mainmenu-47/item/103178-spain-s-enagas-signs-joint-venture-deal-for-building-and- charter-of-lng-bunkering-vessel-at-algeciras-port.

18 PREPARING FOR LNG BY RAIL TANK CAR began testing the transportation of LNG by rail, including a trial run by Elengy that is transporting LNG between southern France and Milan, Italy.15 In January 2022, Elengy signed an agreement with Rubis Terminal to supply LNG to a satellite storage facility near Strasbourg, France, by using rail service from the company’s Fos sur Mer LNG terminals on the Mediterranean coast.16 LNG CONTAINERS Table 2-1 summarizes the main types of cryogenic containers used (or approved) for transportation by the different modes. Ocean-going ships, called gas carriers, transport LNG in much larger volumes than rail and truck, whose containers (shown in Figure 2-3) have greater commonality in terms of capacity and cost. In the sections that follow, an overview is provided of the containers applicable to each mode. A more detailed discus- sion of their safety features is provided in Chapter 4. TABLE 2-1 Containers Used for LNG Shipments by Mode17,18 Marine Vessel Truck Rail Intermodal (All Three Modes) Type Independent tanks Membrane tanks MC-338 cargo tank trailers DOT 113C120W9 tank car UN-T75 portable tank on truck, rail, or ship Container Cost ~$180 million ~$150,000 ~$750,000 $10,000 (20 ft) $52,000 (40 ft)19 LNG Capacity ~35–55 million gal 12,700 gal 30,700 gal 5,000 gal (20 ft) 11,000 gal (40 ft)20 15 Natural Gas Intelligence, https://www.naturalgasintel.com; LNG Industry, https://www. lngindustry.com/liquid-natural-gas/06042021/lng-transported-from-france-to-italy-by-rail. 16 Elengy Press Release, January 29, 2022, https://www.elengy.com/en/news/news/press- releases/441-signature-agreement-customer-reichstett.html. 17 Pedro Santos, “Alternative Energy for Railroads,” September 21, 2021, http://onlinepubs. trb.org/onlinepubs/C4rail/SantosCNGmotiveIncAlternativeRailEnergy092021.pdf. 18 “Hazardous Materials: Liquefied Natural Gas by Rail—Final Rule,” Federal Register, 85 FR 44994, p. 45026, July 24, 2020. 19 Container Exchange, “All Around the LNG ISO Tank with Dimensions, Features, and Costs,” https://www.container-xchange.com/blog/lng-iso-tank. ISO Containers range from $10,000 to $52,000. 20 Scott Nason, “DOT-113 Tank Cars for LNG,” September 21, 2021, http://onlinepubs. trb.org/onlinepubs/C4rail/NasonChartDOT113TankCars092121.pdf.

BACKGROUND ON LNG SHIPPING AND FACILITIES 19 FIGURE 2-3 LNG cryogenic containers. SOURCE: Chart Industries. DOT-113 Tank Car While versions of the DOT-113 tank car have been used to transport cryo- genic commodities other than LNG for decades, the main specification used for cryogenic service today is the DOT-113C120W, which entered service in the 1960s. These vacuum-insulated cars, which do not have any refrig- eration equipment, are used mainly to transport argon and ethylene. The DOT-113 can hold about 30,000 gallons of LNG.21 UN-T75 Portable Tanks As noted above, the UN-T75 portable tank is used to transport cryo- genic bulk cargo, including LNG. These portable tanks can be carried by ship, truck, and rail. They can be permanently affixed to a platform or temporarily mounted to allow for movement between modes.22 The tanks are vacuum insulated and, like the DOT-113, they do not provide refrigeration. They can maintain the cargo at cryogenic temperatures for weeks, ranging from 44 to 65 days for LNG.23 Depending on length (20 or 40 ft), the tank can hold between 5,000 and 11,000 gallons of LNG. MC-338 Cargo Tank Trailers LNG has been transported by truck for more than 40 years in the United States. The shipments are transported in MC-338 cargo tank trailers or in UN-T75 tanks on flatbed trailers. MC-338 cargo tanks, like the UN-T75 and DOT-113, rely on a vacuum-insulation design to maintain cryogenic 21 Todd Treichel, “Research Update Related to Cryogenic Tank Cars,” November 9, 2021, http://onlinepubs.trb.org/onlinepubs/C4rail/TreichelRSI-AARRail-TankSafety110921.pdf. 22 International Organization for Standardization (ISO) Standard 20421-1:2019, https:// www.iso.org/standard/68589.html?browse=tc. 23 Chart Industries (personal communication, March 24, 2022). DOT-113 Rail Tank Car DOT-338 Cargo Tank Trailer UN-T75 Portable Tank

20 PREPARING FOR LNG BY RAIL TANK CAR temperatures.24 The tank has a capacity of 13,000 gallons when carry- ing LNG. During 2021, there were more than 520 motor carriers that transported LNG in approximately 28,000 MC-338 cargo tanks.25 Marine Gas Carriers The first LNG cargo transported by ship was from Louisiana to Great Brit- ain in 1959. Today, the global fleet of LNG gas carriers consists of more than 600 vessels.26 A modern LNG gas carrier is shown in Figure 2-4.27 The majority of ocean-going LNG carriers are designed with membrane tanks, where the tank is built into the vessel’s structure. On some vessels, a portion of the LNG cargo is gasified en route and used for propulsion. Independent tank configurations are also in use. To fuel LNG vessels in port, specially designed bunker barges are used. The first LNG bunker barge built to fuel LNG vessels in the United States started service in Jack- sonville, Florida, in 2018. FIGURE 2-4 LNG gas carrier. SOURCE: U.S. Department of Energy, Office of Fossil Energy and Carbon Management. 24 Specification MC-338; insulated cargo tank motor vehicle, 49 CFR § 178.3381. 25 Paul Bomgardner, “Transportation of LNG by Highway, Introduction and FMCSA Re- sponsibilities,” September 21, 2021, http://onlinepubs.trb.org/onlinepubs/C4rail/Bomgardner FCMCR092021.pdf. 26 All LNG carriers currently operating for import and export in the United States are under foreign flags and with foreign crews. The only U.S.-flagged vessels transporting LNG are a small number of bunker barges that store and move LNG used as fuel in LNG-powered vessels. 27 LNG Carrier, Office of Fossil Energy and Carbon Management, https://www.energy.gov/ fecm/liquefied-natural-gas-lng.

BACKGROUND ON LNG SHIPPING AND FACILITIES 21 NATURAL GAS AND LNG COMMODITY FLOWS In the United States, production of natural gas increased roughly 25 percent between 2016 and 2020. The U.S. Energy Information Administration tracks interstate and international border movements of natural gas, including LNG. Of the nearly 65,752,000 billion cubic feet (bcf) of natural gas trans- ported between states in 2020, the vast majority was transported by pipeline through the transmission pipeline network shown previously in Figure 2-1. Trucks transported only an estimated 3,864 million cubic feet (mmcf)28 of natural gas as LNG.29 Main routes for interstate LNG truck movements are depicted in Figure 2-5. As noted previously, these movements are largely in- fluenced by the location of merchant plants, which are represented by stars. FIGURE 2-5 Interstate LNG movements by truck, 2019. SOURCE: Cambridge Systematics, U.S. Energy Information Administration, and CNG Motive.30 28 U.S. Energy Information Administration, Natural Gas Annual 2020, https://www.eia. gov/naturalgas/annual/pdf/nga20.pdf. “Continuation text lines” documents interstate truck shipments by company. The estimate was derived by compiling interstate LNG movements by truckload by company, as 1 mmcf is equal to approximately one truckload. 29 U.S. Energy Information Administration, Natural Gas Annual 2020, https://www.eia.gov/ naturalgas/annual/pdf/nga20.pdf. 30 Cambridge Systematics, PHMSA Risk Assessment of Liquefied Natural Gas, 2019, p. 42, https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/research-and-development/ hazmat/reports/71651/fr2-phmsa-hmtrns16-oncall-20mar2019-v3.pdf. Natural gas interstate movements by motor carrier were derived from the 2019 EIA Natural Gas Annual Re- port using state centroids as origins and destinations (https://www.eia.gov/naturalgas/annual/ archive/2019). CNG Motive added selected merchant plants as stars for the presentation to the committee on September 21, 2021 (http://onlinepubs.trb.org/onlinepubs/C4rail/SantosCNG motiveIncAlternativeRailEnergy092021.pdf).

22 PREPARING FOR LNG BY RAIL TANK CAR Exports and Imports The United States exports LNG to countries around the world by ship, with only a tiny fraction moving by truck to other countries in North America (see Figure 2-5). U.S. exports have been steadily increasing since 2016 while imports have remained relatively flat (see Figure 2-6).31 In general, exports of LNG to overseas customers are seasonally driven, with volumes to Asia and Europe increasing during the winter months in each region. The timing of exports, however, also depends on infrastructure. For instance, because European countries have an extensive infrastructure to store gas under- ground, they can purchase LNG from the United States at lower prices during the summer months when demand from Asia declines.32 FIGURE 2-6 Annual U.S. liquefied natural gas exports, 2005–2021. NOTE: Data for U.S. LNG exports are overwhelmingly by ship; trucks transport less than 0.04 percent of exports. SOURCE: U.S. Energy Information Administration.33 31 U.S. Energy Information Administration, “Monthly US Natural Gas Imports and Exports January 2014–December 2022,” Today in Energy, https://www.eia.gov/todayinenergy/detail. php?id=49156. 32 Samir Mosis, “Global LNG Market Overview and Outlook,” September 20, 2021, http:// onlinepubs.trb.org/onlinepubs/C4rail/SandPGlobalSameretalGlobalLNGMarket092021.pdf. 33 U.S. Energy Information Administration, “Liquefied U.S. Natural Gas Exports,” https:// www.eia.gov/dnav/ng/hist/n9133us2A.htm. 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 M ill io n Cu bi c F ee t Liquefied U.S. Natural Gas Exports, 2005–2021

BACKGROUND ON LNG SHIPPING AND FACILITIES 23 At this point in time there is great deal of uncertainty about future trends in LNG supply and demand for export trade. It is conceivable that more international competition will have a suppressive effect on LNG ex- ports from the United States. S&P Global Platts forecasts that the liquefac- tion capacity coming online overseas in the next few years may result in a decline in the global competitiveness of U.S. product over the next decade.34 However, the LNG landscape has changed since Russia invaded Ukraine on February 24, 2022; European countries are seeking alternatives to Russian sources for natural gas.35 In response, the United States had diverted 74 percent of total U.S. LNG export cargoes from Asia to Europe during the first four months of 2022 when this report was being written.36 Addition- ally, demand for LNG over the longer term is uncertain inasmuch as may be influenced by public policies aimed at reducing the use of fossil fuels that contribute to greenhouse gas buildup. FACTORS INFLUENCING THE FUTURE DEMAND FOR LNG BY TANK CAR Factors that affect the current and prospective demand for rail transporta- tion of LNG in the United States include the extent and capacity of the com- peting natural gas pipeline network; the ubiquity of the highway network and capacity of cargo tank motor vehicles; and the volumes of product han- dled at different LNG facilities, including import/export terminals. A simple comparison of tank capacities suggests that a rail tank car has an advantage over a truck for long-haul movements over land, because the former can carry three times as much product. Moreover, this advantage is multiplied when considering that dozens of tank cars can be moved in a single train, creating cost efficiencies and other benefits such as reduced greenhouse gas emissions due to lower fuel consumption per volume shipped.37 However, the substitution of tank cars for trucks for long-haul LNG shipping would require rail access at origins and destinations, as well as suf- ficient demand for the larger LNG volumes carried by tank cars. At least in 34 Samir Mosis, “Global LNG Market Overview and Outlook,” September 20, 2021, http:// onlinepubs.trb.org/onlinepubs/C4rail/SandPGlobalSameretalGlobalLNGMarket092021.pdf. 35 Wobble Bond Dickerson, “Ukraine Crisis Changes Equation in Global LNG Market as Nations Look to Reduce Dependence on Russian Gas,” April 22, 2022, https://www. womblebonddickinson.com/us/insights/articles-and-briefings/ukraine-crisis-changes-equation- global-lng-market-nations-look. 36 U.S. Energy Information Administration, EIA Short Term Energy Outlook, June 7, 2022, https://www.eia.gov/outlooks/steo. 37 Federal Railroad Administration, “Rail vs. Truck Fuel Efficiency: The Relative Fuel Ef- ficiency of Truck Competitive Rail Freight and Truck Operations Compared in a Range of Corridors,” May 1991, https://railroads.dot.gov/elibrary/rail-vs-truck-fuel-efficiency-relative- fuel-efficiency-truck-competitive-rail-freight-and.

24 PREPARING FOR LNG BY RAIL TANK CAR the short term, this demand would be affected by the capacity of the origin and receiving facilities to accommodate the larger quantities transported by rail. In the longer term, one would expect the facilities will have time to adapt to the mode that is most economical. That adaptation could include additions to the gas pipeline network, which would have its own capacity and cost advantages over rail and LNG service. LNG liquefaction and storage facilities adjacent to railroads would be the likely origins of any LNG by tank car service. Import facilities at ports with rail access could also be an origin. Some satellite plants that are far from pipeline terminals may have enough demand for LNG to seek supplies by rail. Several LNG satellite facilities are located at seaports with rail access, such as in Jacksonville and Miami, Florida. Opportunities for LNG by rail may also emerge in situa- tions where natural gas production exceeds pipeline takeaway capacity, in addition to remote regions that are not served by pipelines.38 The following section reviews the industries and regions where the prospects for LNG service by rail tank car may be most promising. Service to Merchant Plants For LNG merchant plants that serve large commercial users in remote loca- tions, LNG shipments by rail could help supply the large volumes of fuel needed for high consumption uses, such as for powering the high-horse- power engines for oil and gas drilling. Table 2-2 illustrates a selection of small-scale merchant plants that are currently supplied with LNG by truck that are also proximate to freight rail lines that could be access points for LNG shipments by tank car. This includes a merchant plant in Mexico in response to increased demand for LNG. TABLE 2-2 Selected LNG Merchant Plants with Rail Access39 LNG Merchant Facility Rail Service Pivotal Energy, Wyalusing, PA NS Pivotal LNG Plant, Trussville, AL CSX Okra Energy LNG Plant, McIntosh, AL CSX American LNG Marketing, Hialeah, FL FEC JAX LNG, Jacksonville, FL FEC Stablis Energy Plant, George West, TX UP Stablis Energy LNG Hub, Monterrey, Mexico KCS 38 E. Russell Braziel, The Domino Effect (Arlington, VA: NTA Press, 2016). 39 Aberdeen, Carolina and Western Railway, “Freight Rail Map of Class I Carriers in North America,” https://www.acwr.com/economic-development/rail-maps/class-i-freight-carriers.

BACKGROUND ON LNG SHIPPING AND FACILITIES 25 Service to Maritime Fuel Bunkering LNG is being used increasingly for marine fuel. This development is due in part to new international requirements for the use of cleaner fuels for ocean shipping.40 As of 2020, there were 175 LNG-propelled ships in inter- national trade, and the global demand for LNG-powered vessels is expected to increase further in the coming years.41 Service to New England The supply of natural gas in New England is constrained by the absence of gas processing facilities and limited access to interstate transmission pipe- lines. To meet demand, LNG has been imported to the region by ship for more than 50 years and transported by trucks to satellite and peak-shaving facilities throughout the six states. LNG is imported into New England via the Everett LNG onshore terminal located near Boston, Massachusetts; the Northeast Gateway, an offshore terminal also near Boston; and the Saint John LNG onshore terminal in New Brunswick, Canada.42 Since 2018, annual LNG import shipments during the peak winter months in New England have been delivered on 11 to 14 LNG gas carriers.43 It is conceivable, therefore, that some of this demand could met by land shipments by rail, such as from gas production facilities in the Pennsylvania shale plays.44 An analysis conducted for PHMSA in 2019 examined candidate movements of LNG in rail tank car, cargo tank motor vehicle, and intermodal portable tank from Pennsylvania to Massachusetts to determine which method of transportation would be the most economical. That study found that portable tanks are the most versatile container for transportation, but that rail tank car service was the most economical when considering only direct costs. The study acknowledged that the cost estimate did not include external costs, such as those associated with changes in greenhouse gas emissions.45 40 International Maritime Organization, “IMO 2020 – Cutting Sulphur Oxide Emissions,” https://www.imo.org/en/MediaCentre/HotTopics/Pages/Sulphur-2020.aspx. 41 Offshore Energy, “SEALNG: 175 LNG-Fueled Ships in Operation, 203 on Order,” https:// www.offshore-energy.biz/sealng-175-lng-fueled-ships-in-operation-203-on-order. 42 Technically, the New Brunswick facility regasifies LNG and delivers the natural gas via pipeline to New England. Maritimes & Northeast Pipeline FAQs, https://mnpp.com/canada/faqs. 43 U.S. Energy Information Administration, Natural Gas Weekly Update, January 19, 2022, https://www.eia.gov/naturalgas/weekly/archivenew_ngwu/2022/01_20. 44 Shale gas can be found within the layers of shale formations and is extracted by the pro- cess of horizontal drilling. These areas are referred to as “geologic, or shale plays.” (https:// www.eia.gov/analysis/studies/usshalegas.) 45 Cambridge Systematics, “Risk Assessment of Surface Transport of Liquid Natural Gas,” March 20, 2019, https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/research-and- development/hazmat/reports/71651/fr2-phmsa-hmtrns16-oncall-20mar2019-v3.pdf.

26 PREPARING FOR LNG BY RAIL TANK CAR SUMMARY Natural gas has been safely shipped as LNG by ship and truck for decades. These shipments meet demand in locations lacking access to natural gas shipments through pipelines, including markets overseas. Decades of trans- porting LNG by ship for import and export markets and by truck to fill gaps in the pipeline network have shaped the location and capacity of the country’s LNG facilities. The prospects for significant future demand from these and other LNG facilities for shipments by rail tank car remain unclear. A possible advantage of using tank car over portable tanks and cargo tank motor vehicles is the added cargo capacity, which is about three times greater for a tank car. For this advantage to be exploited, however, the ori- gin and destination of the LNG shipments would need rail access. Because rail access has not been a priority for the siting of LNG export and import terminals and peak-shaving plants, this pattern would need to change. Nevertheless, the U.S. freight rail network is extensive. Other possibilities for rail demand include service to regions that lack significant gas pipeline capacity, industries that are in remote locations but need natural gas, and the growing market for LNG as a bunker fuel for marine vessels. In the absence of more information about this future demand profile, it is not possible to know whether and to what degree trains will transport LNG in shipments consisting of large or small blocks of tank cars and on a well- defined or more dispersed set of routes.