18/03/2019 - 14:55

Woodside, Evol aim to fuel ships boom

18/03/2019 - 14:55

Bookmark

Save articles for future reference.

Tougher emissions standards for ships and a growing need for remote power options for miners could both be a boost for the domestic LNG market.

Nick Rea says the tide is turning as more large shipping companies take up the LNG fuel option. Photo: Gabriel Oliveira

Tougher emissions standards for ships and a growing need for remote power options for miners could both be a boost for the domestic LNG market.

Two major Perth businesses could invest up to $75 million in LNG marine fuel capability if moves to increase usage within the shipping industry prove successful.

That potential demand growth comes as tougher international emissions standards for shipping, including reduced sulfur requirements, lead the industry to explore LNG in place of more common diesel engines.

Woodside Petroleum is driving the market locally as it works with the Pilbara’s big miners to explore shifting their carriers to LNG fuel.

(click to see a PDF version of the full special report)

The company will make a decision this year on building an LNG bunkering vessel for ship refuelling, an investment that may cost as much as $70 million.

“We are a strong advocate for use of LNG as a marine fuel,” the company said in its annual report.

“In 2018, LNG represented more than 90 per cent of the fuel used in our shipping fleet.

“In 2018, Woodside participated in joint industry projects to assess the feasibility for LNG to be used as a fuel for bulk carriers transporting iron ore from the Pilbara.

“In 2019, we will undertake activities to support final investment decision on an LNG bunkering vessel to supply this market.”

A truck fuelling facility built at the Pluto LNG plant will soon be operational.

Wesfarmers subsidiary Evol LNG will also evaluate potential opportunities as demand grows, with a bunker barge and shoreside storage costing about $5 million to be explored.

Evol manager LNG and wholesale Nick Rea told Business News he anticipated solid growth in demand driven by marine fuel.

The company operates a 175-tonnes-per-day liquefaction plant in Kwinana.

“We’re seeing lots of take up by large shipping companies,” Mr Rea said.

“CMA CGM have ordered nine ultra-large container ships, being delivered in the next couple of years.

“Carnival Corporation, the largest cruise liner, they’ve got LNG fuel ships on order.

“The tide is turning.”

The International Maritime Organisation’s regulatory changes plan to cut sulfur oxide emissions 85 per cent by 2020, and carbon emissions by 70 per cent over a longer period.

Mr Rea said about 80 ports worldwide were building bunkering capacity.

“We can bunker LNG in Fremantle using the truck-to-ship method,” he said.

“That’s good, it’s low cost, it’s convenient, it’s more suited for smaller requirements.

“It certainly can get the ball rolling.” 

Perth’s LNG Marine Fuel Institute chief executive Walter Purio said shipping businesses had three options to reduce sulfur content – using distillates, LNG, or buying diesel scrubbers.

Many companies were using scrubber technology to retrofit existing vessels, but Mr Purio said LNG was competitive for new builds.

“There’s about a 20 per cent (cost more than) the normal capital expenditure of a diesel ship,” he said.

“But your fuel costs are significantly less, the wear and tear on your pumps is significantly less.”

Increased use of LNG as a marine fuel would also improve Australia’s security of energy supply, support the coastal shipping industry and benefit public health globally, he said.

Mr Purio called for the federal government to work with the IMO to implement an even tighter emissions standard in Australia, known as an emissions control area.

That would mean heavier restrictions on alternative fuels.

Both Mr Rea and Mr Purio presented at the Australasian Oil & Gas conference last week.

Remote

Evol LNG’s main existing business is providing LNG for remote power generation.

Mr Rea said six mine sites were clients, including Saracen Mineral Holdings’ Carosue Dam, Mineral Resources’ Mount Marion and Doray Minerals’ Deflector.

“We’ve now got quite a good value proposition,” he said.

The company worked with remote power providers such as Kalgoorlie Power Systems and Zenith Energy.

Mr Rea said there was a good pipeline of further opportunities on the horizon, particularly from gold and lithium projects.

Trucking LNG to remote sites was most competitive for mines away from pipeline gas and on (or beyond) the fringe of the power grid, he said, and it could compete with diesel within about 1,000 kilometres of a production facility.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options