By Mia Lamar
Caterpillar Inc. (CAT) said it will begin developing a natural gas fuel system for off-road equipment like mining trucks in a bid to meet strong customer demand for equipment powered by the lower-cost fuel.
Caterpillar, one of the world's largest makers of mining equipment, is partnering with Westport Innovations Inc. (WPT.T, WPRT) on development of the technology, which it expects to start immediately.
Commercial production is expected to begin in about five years.
"The substantial price difference between natural gas and diesel fuel is resulting in a strong financial incentive to enable off-road applications to take advantage of low natural gas energy costs without sacrificing operational performance," said Westport Chief Executive David Demers.
A steep drop in natural-gas prices over the past year has pushed many U.S. industries into virgin terrain as cheap gas has knocked coal from its once-untouchable perch as the nation's favorite fuel for power production.
Caterpillar is the world's biggest maker of bulldozers, excavators and othe earth-moving machinery. The company in April reported that first-quarter earnings rose 29% as improved sales of construction machinery in the U.S. and global demand for mining equipment offset weaker sales in China, Brazil and Europe.
Shares closed Monday at $83.26 and were inactive premarket. Shares of Westport were also inactive from a Monday close at $22.27.
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