LNG plant targets mining, maritime customers

Colony Energy Partners said last week it crossed an important regulatory milestone in its plan to build a $50 million plant in Storey County that will convert natural gas into a liquid fuel for ships, trucks and other vehicles.

Now the company needs to line up customers for the 100,000 to 250,000 gallons of fuel that the plant would produce each day once it begins operation.

Assuming that customers can be lined up, construction is expected to begin by the fourth quarter of this year, said Matt Schmitt, vice president of development for Colony Energy Partners. The privately held company is headquartered at Newport Beach, Calif.

W.M. Lyles Co. of Fresno will be the general contractor on the project, Schmitt said.

Colony Energy Partners said last week that’s received conditional-use and air-quality permits from state and county regulators, clearing the way to move forward with its plans.

The facility is planned on the western side of Tahoe Reno Industrial Center east of Sparks, near NV Energy’s Tracy Generating Station.

That location isn’t a coincidence, Schmitt said, because the same major interstate natural gas line that provides fuel for the power plant will deliver natural gas to the Colony Energy facility.

The company’s technology will freeze the natural gas to minus-260 degrees Fahrenheit for transportation to fueling stations.

Liquefied natural gas — more commonly known as LNG — increasingly is used as alternative to more-expensive diesel fuels in trucks, ships and other high-horsepower engines.

The location also is close to Interstate 80, which would be used by the 10,000-gallon cryogenic trucks — similar to those that transport industrial gases — to haul refrigerated methane to markets throughout the West.

“Within a 200-mile radius, we’ll be able to efficiently supply rail, trucking, shipping and mining industries from this central location,” he said.

Among the target markets of Colony Energy is the mining industry of cental and eastern Nevada, which has a big appetite for fuel for fleets of giant haul trucks.

Looking to the west, Colony Energy sees a market for LNG to fuel ships sailing from the Port of Oakland and other Bay Area facilities.

More than 40 vessels ranging from container ships to ferries that would be fueled by LNG are on the drawing boards in North America, found a study by Zeus Development Corp. released this month.

Ultimately, Schmitt said, the company expects the northern Nevada plant to produce 900,000 gallons of LNG a day. That would be enough to replace about 3 percent of the diesel and bunker fuel currently refined in northern California.

The plant is expected to employ 20 fulltime workers.

Colony Energy sees both economics and environmental concerns as factors driving the growth of the LNG market.

With current abundant supplies of natural gas, LNG costs about $1 less per gallon than diesel fuels. And clean-burning natural gas, which previously had been a clean-energy choice for urban vehicles such as buses, increasingly gets attention from commercial trucking operators as well.

The company noted that while use of LNG in transportation markets is relatively new, the industry has a long history of shipping LNG gas products to countries such as Japan and South Korea that have few domestic sources of natural gas.

Colony Energy, formed in 2011 also is developing plants to generate bio-gas from organic wastes.