Powering the Pilbara – A Prospective Market for LNG

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  • Woodside Petroleum said a 4mn t/yr LNG market could be created if all of iron ore producers switch their iron ore carriers to LNG. 
  • LNG-fuelled ships will deliver to many ports across northeast Asia but they will always come home to the Pilbara. 

Australian independent Woodside Petroleum said a LNG market could be created if all of iron ore producers in the Pilbara region of Western Australia (WA) switch their iron ore carriers to LNG from bunker fuel, reports Argus Media. 

LNG-fuelled carriers

Woodside is also considering submitting a bid to the tender by UK-Australian resources firm BHP for shipping around 27mn t/yr of iron ore on LNG-fuelled carriers starting from 2021, Woodside chief operations officer Meg O’Neill said in a speech to the American Chamber of Commerce in Australia in Perth.

This tender will no doubt be hotly contested, O’Neill said. 

LNG fuelling of bulk carriers

Woodside has already been working towards this for some time. We took delivery of our own LNG-fuelled marine support vessel the Siem Thiima in 2017 and have been preparing the infrastructure to enable LNG fuelling of bulk carriers at their home port.”

These LNG-fuelled ships will deliver to many ports across northeast Asia but they will always come home to the Pilbara, which is also home to significant LNG production, O’Neill said. 

Around 95pc of Australia’s iron ore exports come from Western Australia that totalled 835mn t in 2018.

A new market for LNG

O’Neill said that it is potentially significant new market and would create a new industry in Western Australia that could grow to a fleet of bunker vessels. 

Woodside has been working with Australia’s three largest iron ore exporters UK-Australian resources firms Rio Tinto, BHP and Fortescue Metals to develop vessels that can be fuelled by LNG.

Sulphur content in fuel

The plans for a LNG-fuelled iron ore carrier come as the International Maritime Organisation (IMO) prepares to cap sulphur content in bunker fuel at 0.5pc in January 2020 from the current 3.5pc.

To comply with the new regulation, tankers will have to burn low-sulphur fuels — including marine gasoil or LNG — or install abatement technology, such as scrubbers, to continue to use high-sulphur fuel oil.

Partnership with BHP

BHP forecasts that the new IMO rules will add $2-3/t for shipping iron ore from WA to China and $4-5/t for iron ore freight from Brazil to China.

Woodside and BHP are also partners in the 7.3 trillion ft³ (207bn m³) Scarborough field offshore WA, with the gas from the field to be used as feedstock for a second LNG train at the 4.3mn t/yr Pluto LNG.

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Source: Argus Media

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