An article published in The Australian highlights the potential for liquefied natural gas (LNG) producers to create a viable aviation fuel product.
While aviation fuel is unlikely to become a significant earnings stream for major LNG producers such as Origin Energy (ASX: ORG) and Santos (ASX: STO), it could provide a valuable niche. The closure of Shell and Caltex refineries in Australia has the potential to create a hole in supply which LNG producers could fill, should LNG be proved as a viable source for jet fuel.
They won't be without competition though. Founded in 2007, Algae Tec (ASX: AEB) recently announced a deal with Australia's largest coal-fired power company, Macquarie Generation, to build an algae carbon capture and biofuels production facility alongside the power station. Not only will this facility create benefits from the capture of carbon but Algae Tec also plans to produce biodiesel and hydrogenated grade-A jet fuel. The facility will be built by engineering contractor Worleyparsons (ASX: WOR), with an expected return on investment within four years.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
