Fred Frailey Blog

UP is next to test gas locomotives

Edited April 23, 2013

By early next year or even sooner, Union Pacific will begin experimenting with locomotives fueled by natural gas. This follows tests that began last year on Canadian National and BNSF Railway’s announcement that it may decide by 2014 whether to substantially convert its 6,400 locomotives to natural gas.

Robert Turner, UP’s senior vice president for corporate relations, confirms rumors that his railroad is taking a serious look at the alternative fuel. As with the other two railroads, Union Pacific’s tests will involve liquified natural gas (LNG). Turner would not reveal whether UP has a timetable for deciding whether to begin converting parts of its locomotive fleet from diesel to natural gas fuel. As he puts it, “Think: Walk before you run.”

Turner says UP will retrofit “a couple” of high-horsepower locomotives in cooperation with either General Electric or Electro-Motive Diesel (he wouldn’t say which because the deal isn’t finalized). The test will employ one of the two cryogenic tenders UP has leased to CN (and yes, it will be repainted in UP’s distinctive Armour Yellow).

During the tests, explains Turner, various mixtures of gas and diesel fuel will be tried. Because natural gas does not explode when mixed with hot, compressed air, a small amount of diesel fuel is necessary to ignite the gas. On the locomotives CN is testing, the lower throttle notches employ diesel fuel exclusively; only when the locomotives begin to work hard does gas replace most of the diesel fuel.

“It’s an interesting opportunity,” says Turner. “If you can convince yourself there will be a reasonable price differential between gas and diesel fuel, then you have more confidence in moving ahead. Given the volatility of gas prices, it will be a big issue. Then you have issues about infrastructure to fuel the locomotives. Interoperability is a concern, so this may need to involve the whole industry. And the probability is that we would start on certain corridors rather than willy-nilly.”

In case you wonder why all this is happening, consider the economics. In the first quarter of 2013, Union Pacific paid $3.23 per gallon of diesel fuel. At today's wellhead price for natural gas, UP could buy the equivalent amount of energy for 60 cents. Now that three of the seven Class I railroads have publicly committed to testing natural gas (and the Association of American Railroads has set up a technical advisory group on natural gas that all seven roads joined), the important thing to watch is not the technical success of the tests. The tests should go fine, because the technology for using gas in locomotives is largely established.

The real unknown is the future price of natural gas. Before 2000, the wellhead price of gas seldom exceeded $2.50 per million British thermal units. Then prices became quite volatile, edging upward and peaking at progressively higher prices, ultimately more than $13 in 2005 and almost $11 in July 2008. Then faster than prices had gone up, they began tumbling down.

It’s no coincidence that 2008 was when hydraulic fracturing of rock formations and directional drilling began to unloosen oceans of previously inaccessible natural gas. Prices bottomed in April 2012 at less than $1.90 but have since more than doubled, to $4.41 today. But this may be in part because of the extended winter weather and also because drillers were discouraged at prices of less than $3.

Now that winter is finally letting go, the supply of gas in storage is moving up again, which should put pressure on prices. Plus, higher prices for gas should set off even more drilling and greater supplies, driving prices below $3.50 or even $3, in a sort of virtuous circle. Should  the price return to anything below $4 and stay there for a while, it’s going to be hard for the BNSFs and Union Pacifics of this world to say no to natural gas. — Fred W. Frailey

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  • The truckload sales people I talk say they are being asked  by their customers when they are going to switch to natural gas so that their price comes down. You can bet the railroad big customers are saying the same thing. It is important to note the US has hugh supply of natural gas which could keep US natural gas prices competitive for the long term.  My guess is you will see natural gas engines on railroads in limited corridors within the next few years as the economics are pretty compelling.

  • Several problems appear to me to be present with either LNG or NG. At extremely low ambient temperatures would the LNG properly vaporize? What about the hazard of LNG or NG exploding during a derailment and incinerating the crew and the locomotive as well as cars of nearby structures?

  • Come on, Fred.

    Cryogenic LNG bombs, I mean non-revenue tankers (and associated supply/distribution infrastructure).  Still need Diesel fuel to start the ignition process (retaining associated infrastructure).  Recent history of *quadrupling* in price.  

    Not.  Gonna.  Happen.

    Someone smart, probably with a name that rhymes with "Lauren Stuffit", will figure out how to get the catenary and distribution system (and maintenance thereof) on someone else's books with the RR buying kWh from the vendor.  A smart vendor will buy those kWh on the open market so as to insulate itself from cost spikes in various fuel markets.  

    And, OBTW, the RR's locomotive maintenance costs are what?  Halved?

    How has this not already happened???  

  • I wonder if taking speculators out of the supply chain will help stabilize the price of all fuels.  Price fluctuation is a big red flag to spending all that money on infastructure for a wholesale change to natural gas in either form.

  • New York Times: April 23, 2013

    Trucking Industry Is Set to Expand Its Use of Natural Gas

    www.nytimes.com/.../natural-gas-use-in-long-haul-trucks-expected-to-rise.html

  • Many diesel manufacturers have the option for different fuels. Fairbanks Morse offers many of their engines, including the classic 38D8 1/8 OP, with "dual-fuel technology." I've never had the honor of working on such a beast but have worked with those who have. The extra fuel option means extra piping for said fuel and all the extra headaches that come with complexity. We shall see what the railroad (and their suppliers) come up with.

  • 100 years ago The Milwaukee Road was expanding West and hanging wire while boys were reading Tom Swift and his Electric Locomotive.  It all got shot down when Rockefeller's Standard Oil bought the US government and has forced American's to use his fossil fuel even since.  He formed National City Lines and his Esso with Firestone and GM scrapped the streetcar systems across the country replacing them with busses.  Even the gas scare of the 70s when the BN and UP reconsidered the possibility of electrifying their main routes it too fell by the wayside.

    Europe's main railway trunk lines have been electrified for decades but of course John D didn't dictate to the politicians here.  Isn't free enterprise great with the rich pinkos getting richer and the millions of poor men and women who work for slave labor wages forced to pay the same at the pump as the Washington DC bought politicians?

    They are the invisible majority with no say in DC thanks to the greedy Republicans working against Obama who has tried to straighten up the mess cause by Dudya.  No wealthy American has a right to call himself a son or daughter of the nation when he or she refuses to pay a fair income tax to the country that has loop holes so they can rake in more cash while human beings who lost their jobs because these greedy wealthy "citizens" shifted the jobs to Asia are forced to live under bridges in cardboard boxes with their children and no sign of basic health care when they get sick.  This is a human rights violation and is a disgrace to the human race.

    Socialism is a dirty word because it means sharing with the needy and poor.  So may the wealthy stuff their pockets full of cash while poor people starve and die on the streets on the USA.

    America is dead, long live America!

  • Trinity River Bottoms boomer:  I thought you might appreciate being informed that someone obviously has high-jacked your Trains magazine sign-on and is posting mean-spirited political screeds under your name.

  • Rail Pundit

    No way!

    I just wanted to see if you are still active.  My first comment was addressed to you here but for some reason didn't get posted.  It wasn't a socialized question either.  Surprised this one made it.

    My non-posted initial question was: do you think the main trunk lines accross the US should have been electrified instead of developing larger steam locomotives such as the ones that the Santa Fe rostered to move freight over Raton Pass, GN's lines in the Pacific Northwest (I never understood why the Cascade tunnel electrification wasn't extended) , SP's route over Donner Pass, etc.  Would not hanging wire have been more economical in the long run?  

    Should such coast to coast electification in selected lines been partly financed by the Gov?  I agree with you on long distance Amtrak subsidies.  The German Gov gave DB a nice bundle of my tax money for the next operating year.  It has been a government owned quasi-privitized railway since it was created in 1994 from the merger between the Deutsche Bundesbahn (W) and Deutsche Reichsbahn (E).  49 million Deutsch Marks was invested in the new "DB" logo replacing the former DB logo!  Paper with the former DB and DR logos was trashed replaced with the new image on all letterheads in record time.

    At the time of the 1970 BN merger while visiting with the boys in the GN's off-line traffic office in Dallas, I read the internal message sent to all traffic offices across the system to continue to use the pre-merger letterhead paper for internal correspondence and the new image BN for customers.  Socialism on DB?  You got it, the taxpayer picked up the tab for the new image paper as the Bundesbahn's printing offices were shut down in favor of using outside printing companies!  

    Apologies for the socialism.  I've enjoyed health care too long though I paid into the system dearly for it and still do despite the fact I am retired.  Like the elected politicians in the US and the military,  I wouldn't want to be without it.  Working people deserve it but not at the expense of small business mom and pop companies going out of bizz.  It shouldn't be a freebe from Uncle Sam forced on any business or individual either.  Item: I had health care in TX when I was employed with the ATSF back in the 70s provided by Travellers.  

    Sorry, guess I let Michael Moore's doc "Sicko" get the best of me.  Hey, spring finally arrived though it was a long time coming.  The sun is out, birds are singing, life is great!

    Glad I got your attention as I enjoy these chats!

  • You doggone right getting speculators out of the energy market would stabilize prices.  All one needs to do is remember the wild price spikes that have occured even though there was no shortage of oil.  Futures markets in the middle of the 1900s were never subject to the hugh cash ability of hedge funds, etc and prices remained stable.  They did not have the crazy fluctuations that todays makets have because of big money.

    Speculators have cost the public hunreds of billions of dollars in the last several years not just from the cost of gasoline but because it drove up transporation and manufacturing costs as well.  And those higher prices don't really seem to ever go back down much.  It's probably another reason our economic problems.

  • Yes, I'm still here, you obviously got my attention.  If you go back to the time of the GN/NP/CB&Q merger, you know that was a time when U.S. railroads were happy to find themselves in business every morning.  Somehow, I can't get excited over a memorandum instructing people on which letterhead to use.  I consider that one of the worst aspects of bureaucracy.  I came into the industry about that time and consider the kind of things you are telling us to be nothing more than proof that in the railroad culture you thought at your own peril.  Unfortunately, not enough supervisors could do the thinking for the half-million or so rail workers in the land.

    As for socialization and health care, it really boils down to whether you consider health care to be your right (entitlement) as an American or a privilege reserved for those who can pay for it.  As a survivor of sudden cardiac arrest and then aortic valve replacement surgery, I choose to thank my fellow taxpayers for their contribution to my current good health.  Despite the bleats of right-wing ideologues, I consider this country wealthy enolugh to provide health care for all its citizens.  No one else if required to have the same beliefs I do.  I'll continue to pay my taxes and wish everyone else good health and happiness.

  • Trinity River Bottoms Boomer,

    I afraid that the good old US of A as had too much coal and oil for railway electrification to make much sense after the 1930s as the diesel-electric came into its own and began to supersede steam.

    Our oil production was huge… and still is… I read that the oil production from the east Texas fields in the 1930s-40s could have supplied the entire Allied war effort in WW2. Gas rationing was a prudent precautionary measure that was necessary in part because of the German U-Boat campaign off our east coast in the first few months of the war.

    Thus oil has historically been cheap in America, so that’s what we use, switching from steam to diesel was a lot more affordable than electrification, and could be achieved incrementally over a decade or more.

    It’s too bad that the Milwaukee Road wasn’t able to string up more wire, to connect their two segments and perhaps extend mainline electrification to the Twin Cities and Chicago… but this would have required a federal loan or grant, as with the Pennsylvania’s NYC-DC electrification project.

    Overseas it is a different story, in post war France the rail network had suffered massive damage and sense a major rebuilding was required the government which owned the rail network decided to modernize and expand it at the same time.

    France is very poor in reserves of coal or oil, but had plenty of hydroelectric potential (and later a large nuclear program) so a campaign to electrify the major trunk lines was under taken, diesel locomotives and rail-cars would handle the lightly trafficked secondary mainlines and branches.

    The first major project was the Paris-Lyon mainline which was electrified at the older 1.5 kV DC, but the successful development of the modern 25 kV AC system on a secondary mainline led to that be chosen for the successor projects, including the new dedicated high-speed lines for the TGV.

    So in France the economics of electrification was a lot better because of the importation of expensive foreign oil, the heavy passenger traffic, and the willingness of the government to foot the large short term costs of electrification in return for the long-term benefits.

    In Japan like France (and other countries like Switzerland and Sweden) domestic energy security led to a large railway electrification program in the post war decades. Japan’s energy insecurity was a major factor in the disastrous decision to wage war against the U.S. and western powers.

    In the 1970s the energy crisis from the Arab Embargos led Japan to accelerate the construction of nuclear power stations, and after Fukushima and the ongoing shut down of its atomic plants its trade deficit as sharply spiked as coal and gas is once again imported to reopen thermal plants. Gasoline is also very expensive. In this type of environment extensive electrification makes sense.

    But an additional factor for JNR was its Cape Gauge 3ft6in system, to run long and fast passenger trains without causing excessive damage to lightly built tracks and soft roadbeds, heavy locomotives could not be used so light weight yet high power electric MU trainsets for both commuter and intercity express services where the solution.

    The EMUs could also better climb the rail system’s many heavy grades and accelerate faster from station stops. In the early 1970s a passive titling system was developed to increase average speeds on the nation’s many curvy lines. It was some time till the tilting system could be applied to DMUs, the diesel engines where initially in the way.

    Today China which lacks a large domestic source of oil while also looking to maximize the efficiency of its overburden rail system is today also electrifying on a large scale. Russia is an outlier, it has plenty of oil and gas and yet has also electrified much of its rail system, but like China the railroads are state controlled.

    Clearly we are not going to see “Peak Oil” anytime soon, and with North America well on its way to an oil and gas surplus… large scale electrification seems a long way off for North American railroads. Perhaps for some heavily used commuter and intercity services the story will be different.

  • Thanks guys,

    It all makes sense to me.  I come here to get educated and appreciate and respect professional answers.  I am not a socialist but do enjoy health care though I do pay for it unlike the millions of squatters who have come here to get on the system and never have worked a day since they arrived here and many can't even speak the language.  I agree with you Rail Pundet!

    As in the case of the MILW, wasn't there an ample supply of hydro-electric power in the Pacific Northwest for the GN and NP to consider electrification too?  I realise that the GN hung wire through Cascade Tunnel for the smoke issue but still don't understand why it wasn't extended to Spokane and Seattle thus making one locomotive change at Spokane and eliminating the changes required at the tunnel.  

    With all the money that has been spent on improving the diesel-electric it still seems that a long term program to hang wire on select trunk lines would have been good economics.  Having not studied the subject in any elite college I thus turn to you guys.  Thanks for the replies and answers.  

  • Here's a potpourri of comments in reply to the latest from bjturon and Trinity River Bottoms Boomer:

    You're right, bj; this country was the dominant producer of crude oil back when WWII started, and it still is a huge producer.  The war stimulated construction of pipelines connecting the Texas Gulf production points with Northeast consumption points.  You may be too young to have heard of the "Big Inch" and the "LIttle Inch" pipelines.

    U.S. consumption of oil grew faster than production, and by the 1970s, Congress passed a law banning the export of U.S.-produced oil.  When Alaskan production was ramping up, there was evidence that it would haave made economic sense to ship Alaskan oil to Japan and places in the Far East and repolace it with easily:imported oil from Canada, which still is America's greatest supplier.  But, that would have required Congress to backtrack and acknoledge that its 535 members in the House and Senate collectively are economic illiterates.  So, we still cannot export U.S. oil.

    Electrification: A wonderful idea, if you really want to put the rail system at the mercy of a customer industry and sacrifice the flexibility that comes with refueling locomotives at numerous points.  Utilities like to battle with railroads over the rates for delivering coal. Think how things might be if your friendly neighborhood ute could shut a railroad down simply by throwing a switch. Milwaukee's failure really had little or nothing to do with its choice of fuel. It was simpoly that Milwaukee didn't have enough traffic to support its capital structure, no matter how cheap and efficient electricity might have been as a fuel.

    While musing about such cosmic things, think for a moment about intermodal, today the fastest growing traffic source railroads have and one where they finally are making enough money to justify reinvestment in plant.  While Europe and other places still do not operate double-stacks, U.S. railroads do.  Had the U.S. electrified, it would have cost billions to raise the catenary to accommodate double-stacks - or we could have single-stack intermodal, although I know of no one who thinks that would be a good economic idea.

    Also, bj, I think you may need a new or different history text.  France has huge amounts of coal, particularly met coal, the same stuff that we export to Europe.  Ours is just a heck of a lot cheaper.  China is electrifying not because it lacks coal or oil; it has plenty of both.  What it doesn't have is coal and oil anywhere near where it is needed.  So, China imports coal to burn near its Pacific Coast and thereby relieves the burden on its inadequate transportation system of moving coal from the south to northern China.

    Perhaps if you were starting a rail infrastructure today, we might see electrification in the U.S.  It does have the virtue of being able to wheel kilowatts throughout the grid.  But we are not starting a rail infrastructure today; we are expanding and improving the one we already have.  Back when Northeast and Midwest railroads were going bankrupt, it was said that there was too much capacity for the available demand.  Railroads also were regulated every which way by the federal and state governments and were losing high-rated traffic to trucks that were subsidized by us taxpayers in the form of modern highways for which they didn't have to pay their allocable share of the cost.

    And Trinity, I think you may want to go back and reread what I have said on a number of subjects.  I reject out of hand your little diatribe against immigrants.  My grandparents came here from eastern Europe, and they came for a better life than the Coassacks and the Czar were willing to let them have in the old country.  They worked hard and thanks to the then low tuition rates, my father became the first in the family to go to college.  We all are immigrants, although I'll give you a pass on that if you can prove that your ancestors rode with Sittling Bull and other Native American chiefs.  The immigrants didn't come here for the welfare; it isn't enough to attract too many.  They came here because there was work to be performed.  Go out to Santa Cruz, CA, or much of Florida and watch who picks the fruit and veggies.  They do it for wages that "good American folks" won't work for.  As for their not speaking English, neither did my Russian and Polish immigrant grandparents - or my wife's Italian immigrant grandparents when they first got here.

    Rail Pundit is in a good mood, so he hopes this is neither too long nor too mean-spirited.  But he really gets annoyed when people recast history to fit their ideology whether it be accurate or not.  Have a nice day.

  • Oil speculators have sadly changed how oil is priced with price changes occuring every minute.  In my prior life before retiring I worked in the upstream end of the oil and gas business.  In the early days the oil companies would publish a price list for each field they bought oil from.  The price would be a scale based on oil quality and geography.  The price list would be good for 2-3 years then slightly modified if warranted.  In those days the average price for west coast crude was about $3 per barrel (42 gallons).  Natural gas price was based on the border price at the Colorado river where Pacific Lighting took possession from El Paso Pipeline Co.  Once a year we would get a letter from Pacific Lighting stating the gas price.  There was very little variation from year to year.  This price was used for gas purchased from the various fields in California.  Then came the oil embargo and OPEC setting prices.  The orderly world came to an end then.  Gasoline went from 30 cents to $3.00 plus per gallon in no time at all.

    Energy and food are the two items that economists referr to as inelastic supply/demand,  If meat  would drop to 1 cent per pound consumption would go up slightly as people switched from hamburger to steak and people switched from grain to meat in their diet.  But consumption would not go up much because no matter how low the price went you could only eat so much.  The same is true on increasing prices.  As prices increase for steak people could swithc to hamburger but there is a minimum amount of meat that is needed to sustain life.  So no matter what the price for meat does consumption would essentially stay flat.  The same is true for fossel fuels.  Yes, you could switch from coal to natural gas, but the BTUs utilized would stay flat.  You can only drive your car so much no matter what the gasoline price does.  If gasoline prices spike up unnecessary trips could be eliminated but there is a minimum amount of driving required to get to work, etc.  If gasoline prices drop you might schedule another driving vacation but there is an upper limit as to how much driving you can do.  Therefore energy consumption is inelastic as is food.

UP is next to test gas locomotives