Caterpillar and Westport Innovations enter the natural gas vehicles business

Earth-moving equipment maker Caterpillar (NYSE:CAT) will work with Canadian Westport Innovations (TSX:WPT) to develop natural gas-powered engines for mining trucks, locomotives and other heavy equipment that typically uses diesel.

Caterpillar and Westport, a maker of natural gas-powered engines for vehicles, will also develop natural gas technology for Caterpillar's off-road engines used in electric power, industrial, machine, marine and petroleum applications, said the Vancouver-based company in a statement.

The idea is to take advantage of natural gas low prices and, potentially, convert existing equipment using diesel engines to the cheaper source.

"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," Westport chief executive David Demers said.

Commercial production is expected to begin in about five years.

Watch the announcement below: