Caterpillar and Shell are Working Hard to Clean Up the Canadian Oil Sands Before It's Too Late

Natural gas is abundant and relatively cheap in the United States. Although that's not a situation replicated around the world, it's causing some notable changes domestically. One big area is transportation. And now Royal Dutch Shell , in an almost ironic twist, is set to test out liquified natural gas in its mining trucks.

At the leading edge
Clean Energy is at the forefront of the effort to get vehicles to use natural gas instead of gasoline or diesel. It started by pushing into the fleet vehicle market, including such niches as airport transportation and garbage trucks. The benefit is reduced costs and emissions, a win-win if it weren't for the cost of retrofitting or buying new vehicles.

Still, natural gas has started to catch on. Trash haulers Waste Management and Republic Services , for example, both spend heavily on new trucks every year, so converting to natural gas isn't as onerous. About 80% of Waste Management's truck buys and 50% of Republic's are powered by natural gas. And they aren't the only big-name converts, General Electric has been working with Clean Energy, too.


Most recently that's included offering financing for long-haul trucks to customers who sign fueling agreements with Clean Energy. And GE isn't the only big partner Clean Energy has found—it also signed a deal with United Parcel Service  to provide fuel for UPS' long-haul liquified natural gas (LNG) trucks. UPS could turn into a key partner since it has committed to buying 1,000 LNG vehicles in the hopes of saving up to 40% on fuel.

The next markets
And natural gas is starting to gain traction in other areas, too. For example, GE is working with CSX  to convert trains to natural gas. Testing of that technology should start in early 2014 and, when combined with the long-haul truck shift taking shape, could have major implications for both natural gas and diesel. According to GE, "the U.S. fleet of 2.3 million heavy trucks and 24,000 locomotives consume about 42 billion gallons of diesel every year."

And now Shell is set to start testing the use of natural gas on the Caterpillar trucks it has working the Canadian Oil Sands. This test run is set to start in 2016. Caterpillar is working on a new truck and a retrofit for some of Shell's older trucks. Since the oil sands are basically a mining operation, it will be interesting to see how Cat can use this test to push natural gas into other markets in which it sells similar gear.

Shell, which has a long history with natural gas overseas, is a great partner because of its experience and the fact that there's ample, and cheap, natural gas available in North America. That's been a thorn in Shell's side since it bought into the U.S. natural gas market when prices were higher. But its own efforts with the fuel show that it is looking far into the future, and is willing to make the investments today to be a part of the natural gas transition that is slowly taking shape.

"We believe we have to be able to compete both economically and environmentally," says Shell vice president John Rhind. With the oil sands, that means trying to reduce the environmental negatives associated with mining oil in the region—an increasingly prominent issue. Since natural gas burns more cleanly than diesel, this test is a good start down that road. And saving money is nice, too, since oil sands operations are relatively expensive.

Evidence is building
Oil and gasoline aren't going away. However, natural gas increasingly looks like it is ready to take a more prominent place at the energy table. That's good news for fuel provider Clean Energy, but also for companies like GE and Caterpillar that are working on the technology to get natural gas into new markets. Shell, best known for oil and gasoline, meanwhile, may soon be known just as well for its natural gas resources.

Here's what Canada is trying to catch up to
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The article Caterpillar and Shell are Working Hard to Clean Up the Canadian Oil Sands Before It's Too Late originally appeared on Fool.com.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Republic Services, United Parcel Service, and Waste Management. The Motley Fool owns shares of CSX, General Electric Company, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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