Citizens Energy Group plans to establish a subsidiary that will market and sell liquefied natural gas as a vehicle fuel, the utility said in a filing released this week.

LNG Indy plans to sell the fuel as an alternative to diesel in heavy-duty vehicles or for off-road applications such as drilling rigs, marine vessels or rail vehicles. It also would market the refrigerated liquid as replacement for propane in agricultural drying and in asphalt production.

The multistate transportation subsidiary would purchase the fuel from Citizens Gas’ LNG plant at 4536 W. 86th Street in Indianapolis.

That facility will be expanded, although Citizens did not disclose the amount of the investment planned in the Dec. 3 filing with state regulators.

Citizens officials were not available to discuss the project Thursday morning.

The LNG plant and a sister facility in Beech Grove buy natural gas when it is cheaper during warm-weather months. The gas is chilled to a liquid state to maximize storage capacity—the equivalent of 1 billion cubic feet of gas in each LNG plant.

The gas is tapped as needed during peak winter demand for Citizens' 266,000 natural gas customers in Marion County.

However, in another filing this month with the Indiana Utility Regulatory Commission, Citizens said it plans to decommission the LNG-South facility, at 3565 Big Four Road. It cited high capital costs for the closure among other reasons.

Citizens said possible market conditions down the line could warrant using the South facility for producing, marketing and selling LNG.

In June, Citizens said it planned to sell LNG for use in cross-country trucks as a lower cost alternative to diesel fuel.

 “It is estimated that converting from diesel or propane to LNG currently can save 20 percent or more on a company’s total fuel bill,” Citizens said in its IURC filing this month.

Citizens already sells compressed natural gas to truck fleets in the city.  LNG can be even more cost effective than CNG, but vehicles that burn it must have refrigeration equipment on board. Thus, LNG is often most cost effective for trucks that drive long distances.

Citizens told the commission that sales of LNG to the new subsidiary will not adversely affect reliability of its gas-distribution system.

Earlier this year, Citizens said it was negotiating with at least three developers or fleet operations interesting in contracting LNG from the utility.

One commercial developer that identified Indianapolis as a future site for an LNG fueling facility is California-based Clean Energy Fuels. It said the pumps are planned for the Flying J at 1720 W. Thompson Road.