Offshore oil & gas: Woodside Petroleum’s February launch of a new supply ship that can use liquefied natural gas as a fuel is an early move in what could be a larger focus on driving new market demand.
Woodside Petroleum’s February launch of a new supply ship that can use liquefied natural gas as a fuel is an early move in what could be a larger focus on driving new market demand.
The vessel, the Siem Thiima, is one of very few ships in the Southern Hemisphere that can run on both diesel and LNG.
By comparison, about 200 LNG-powered vessels operate in the Northern Hemisphere, with about the same number currently under construction.
Wesfarmers subsidiary Evol LNG provides facilities at Fremantle and Dampier for such ships to refuel.
In Woodside’s recent results report, the company revealed it was considering going much further.
Among its top-priority proposals are construction of a new truck-loading facility at the Pluto LNG plant by the end of 2017, and promoting demand for LNG by local industry.
Those plans are being finalised in the first few months of this year, while the company also mulled mid-scale expansion of the Pluto facility to increase output up to 25 per cent.
Woodside has said it was involved in a joint industry project to further the usage of gas in the Pilbara, including working with manufacturer GE.
LNG-powered shipping is one part of that.
An additional move would be to use the fuel to power locomotives that carry ore from mines to ports, Woodside has said.
About 3.5 billion litres of diesel fuel crosses the wharfs into the Pilbara annually, according to Woodside chief executive Peter Coleman, and a further five billion litres are used on iron ore carriers travelling to destinations such as China.
In LNG terms, that market could be worth 0.5 million tonnes of LNG per annum.
Woodside’s annual production from Western Australia will be about 7.8mtpa once Wheatstone is running at full rate.
Speaking to investors earlier this year, Mr Coleman said this was the real blue-sky opportunity in the marketplace.
There seems to be a broader appetite for moving to natural gas as a fuel in the Pilbara.
Fortescue Metals Group, as an example, built the Fortescue River gas pipeline to connect part of its iron ore processing infrastructure, at the Solomon Hub, to the domestic gas network.
Plans were flagged to make similar moves at the Christmas Creek and Cloudbreak hubs.
Last year, miner Gold Fields opened a new modular-built gas power plant at its Granny Smith mine near Laverton, to move the operation away from diesel.
That used domestic gas through APA Group’s Eastern Goldfields pipeline.
Woodside appears to have been considering using its muscle further downstream for at least a year.
Speaking at the LNG18 conference in April 2016, Mr Coleman flagged the company would look at opportunities to do just that.
Floating re-gasification terminals, which are portable plants to turn LNG back into a usable gas form, were one option he highlighted.
Mr Coleman said the floating option would be a cheap way to enter new markets, where there was often a latent demand for gas that couldn’t be fulfilled because of the high capital cost of permanent terminals, and issues finding counterparties in developing countries.
About 0.5 per cent of global re-gasification capacity was floating a decade ago, while as recently as 2016 it was around 9 per cent.