BHP plans LNG-fuelled fleet expansion

Thursday, 03 November 2022
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Mining giant BHP has outlined plans to inaugurate three new LNG carriers within the next three quarters, as it accelerates its long-term strategy to reduce emission. 

The firm is targeting net zero greenhouse gas emissions across its operations by 2050 and has supported LNG as a key transition fuel for its global shipping fleet.

The firm launched its first LNG-fuelled vessel at the start of this year, bunkering the Mount Tourmaline in Singapore. The vessel was the world’s first LNG-fuelled Newcastlemax bulk carrier and will transport iron ore from Western Australia to Asia.

Biofuel future

Since the successful launch of the Mount Tourmaline however LNG spot prices have rocketed as the Russian invasion of Ukraine has driven European demand for LNG imports as the continent seeks to replace Russian pipeline gas.

As a result, BHP is bringing forward plans to replace traditional LNG with biofuel and is particularly interested in opportunities to bunker bioLNG in Singapore for the return trip to Australia.

"The volatility we are seeing at the moment is really unprecedented," Fergus Eley, BHP's Head of Maritime Enterprise, said in comments to Reuters, adding that the firm has “conducted one or two (biofuel) trials in the last 12 months, and we are now working on a larger contract.”

A key advantage of biofuel for the energy intensive but regularly scheduled ore carrier routes is that it can be produced consistently and in locations without natural gas reserves. The firm has so far secured long-term supply from Western Australia’s plentiful natural gas reserves but remains beholden to the global market when purchasing fuel in Singapore.

Creating demand

Despite encouraging results from early biofuel trials, Eley notes that scalability of biofuel remains a key challenge for the mining industry, given the size of the gigantic ore carriers and their ensuant fuel needs but that this may also ensure base demand for new biofuel infrastructure.

"We can help create that demand and we're doing so by forming contracts where some of our vessels that go through to Europe, bunker here in Singapore with biofuel," Eley commented.

Singaporean bunkering firm FueLNG likewise sees this demand as vital in driving uptake of LNG and bioLNG, with Chris Ong, chairman of FueLNG, noting that, “LNG plays an important part in the clean energy transition” and predicting that the firm will be “well positioned to support the decarbonisation efforts of industry leaders such as BHP.”

Headquartered in Melbourne, Australia, BHP is the world's largest miner and shipper of dry bulk commodities. The firm aims to cut emissions from its long-haul shipping operations by 20% by switching to biofuel. 

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