Rare Consulting analyst, Mark McKenzie, who led the Federal Government's Alternative Fuels Conversion Program, told the Adelaide event that recent real-world trials had returned positive results.

“There’s a big opportunity for natural gas in the heavy vehicle transport sector,” McKenzie said.

“Our trials determined that it is a viable and cost-effective fuel for vehicles travelling over 200,000km per year as long as oil stays above $[US]50 a barrel.”

But McKenzie did concede that the large initial capital outlay required, such as rebuilding the truck engines, would delay the sector's growth.

Depending on the individual situation, he calculated that it could take anywhere from four months to six years for transport companies to recoup these costs.

Natural gas is available in two forms for transport – LNG and compressed natural gas (CNG). One cubic metre of CNG or 1.62 litres of LNG offer the same energy output as a litre of diesel.

The Alternative Fuels Conversion Program study found that CNG was more suited to short-haul and urban haul back-to-base work, while LNG suited back-to-base long-haul work.

But McKenzie noted that natural gas would probably be bypassed by other alternative fuels, such as biodiesel and liquid petroleum gas (LPG), in the shorter-term.

“The key issue here is that there are a lot of fuels around at the moment, but natural gas is the only one not getting enough attention on the policy debate,” he said.

“There’s no silver bullet and going forward we are going to have to look at a whole range of fuels.”

Conversely, the variety of “green” fuels on offer is confusing the policy makers, he said.

“Much of the recent effort in this area has focused on contemporary environmental outcomes but paid insufficient attention to the other core requirements such as: abundance of supply, producer economics, fuel quality, user economics and operational performance.

“When considered in light of these wider criteria, the majority of the available alternative fuels fair badly when compared with conventional transport fuels.”

LNG is already being used as a transport fuel in Europe and the United States, while several companies have started making inroads in Australia.

In Western Australia, diversified corporation Wesfarmers has begun building a 175-tonne per day LNG plant in Kwinana, which will produce fuel for heavy trucks and regional power generation.

Meanwhile in Queensland, Arrow Energy has agreed to supply gas from its Daandine coal seam methane field for use as feedstock at a proposed LNG plant.

The LNG produced from the plant will be targeted to customers in southern Queensland and northern New South Wales. Arrow chief executive Nick Davies has told PNN that he understood it would be mostly used for long-haul trucking as a diesel and LPG replacement fuel.

"Coal seam gas suits small-scale LNG for road transport because it is widely distributed and is often near major roads and transport hubs.

"We believe that the demand for LNG has the potential to support significant growth. We also believe that there is an untapped opportunity for LNG in the Australian and Asian markets".