LNG

Western Australia is heading for more liquefied natural gas use in trucking, shipping and among mining operations after energy company Woodside Petroleum opened a truck-loading facility at its Pluto LNG export plant.

The state Premier of Western Australia, Mark McGowan, officially opened the facility at a ceremony at the coastal town of Karratha, near the Dampier LNG export terminal.

The medium-term aim for the shipping sector is to supply LNG fuel to heavy iron ore carriers sailing from Western Australia to Asia.

However, Woodside’s initial focus is on supplying trucked LNG to mining operations and communities in the Pilbara, Kimberley and other regions of the state for power generation and as reliable, flexible and cost-competitive fuel.

The trucked LNG will also be used to supply coastal shipping with gas-fuel capability, including the LNG-powered offshore support vessel “Siem Thiima” which joined Woodside’s fleet in 2017.

Woodside said that after full commissioning the facility would initially be able to deliver seven LNG truck loadings per day, each one transporting the equivalent of more than 80,000 litres of diesel.

“At this initial capacity, replacing that diesel with LNG could reduce life-cycle greenhouse gas emissions by more than 120,000 tonnes per year,” said Woodside.

The truck-loading bay’s capacity can be doubled by moving to 24-hour operations and can be further expanded if needed to meet future market demand.

“In the longer term, the availability of LNG from the truck-loading facility could support the transition towards cleaner fuel for trucks and trains in the region’s heavy transport sector,” explained the company.

“Woodside is also planning to develop infrastructure for supplying LNG to the international shipping industry, particularly iron-ore carriers on the busy trade route from the Pilbara to Asia,” said Woodside Chief Operations Officer Meg O’Neill.

She added that the Pilbara region was an ideal hub for an LNG fuels market, with established LNG processing facilities located close to large-scale mining operations and port infrastructure.

“The Pluto LNG Truck Loading Facility is a further demonstration of our commitment to supplying domestic gas, and highlights Woodside’s drive to find new markets for our cleaner LNG,” said O’Neill.

“Around three billion litres of diesel are imported into the Pilbara every year, mainly for the mining industry. In addition, the ships exporting iron ore to international markets from the Pilbara consume approximately five billion litres of heavy fuel oil annually,” she explained.

“Woodside believes that LNG produced here in Western Australia can replace those higher-emissions fuels, delivering environmental benefits while supporting the growth of local industries and creating new markets for locally produced LNG,” stated the Woodside executive.

At the Karratha ceremony, Woodside also thanked its joint venture partners at Pluto LNG, the Japanese utilities Kansai Electric and Tokyo Gas and the downstream joint venture partner EDL Energy, as well as trucking partner Linfox and foundation customer Sheffield Resources.

Woodside Petroleum, the operator of the North West Shelf and Pluto liquefied natural gas plants in Western Australia and a stakeholder in the state’s newest Wheatstone facility, posted a more than 40 percent jump in LNG sales revenue in 2018 to US$3.76 billion on increased demand from Asian customers and higher prices.

Woodside said in its fourth-quarter report to the end of December that the 2018 total compared well with the US$2.67Bln of LNG sales revenue received in 2017.

Woodside said its quarterly revenue from LNG sales amounted to US$1.17Bln compared with US$881 million in the previous three months to September and US$717M in the fourth quarter of 2017.

Woodside said demand was higher from the North West Shelf, Pluto and Wheatstone plants in Western Australia because of a combination of factors including customer demand, ongoing plant optimization and in the case of Wheatstone, higher output after the commissioning of the second liquefaction Train.

Woodside said its overall quarterly sales revenue, including oil and condensates, came in at US$1.42 billion, an increase of 43 percent compared with the fourth quarter of 2017.

The company’s average LNG price during the quarter was US$10.40 million British thermal units, with US$9.20 per MMBtu for North West Shelf, US$10.80 per MMBtu for Pluto and US$11.20 per MMBtu for Wheatstone volumes.

Woodside’s total sales revenue for 2018, including oil, condensate and other products was US$4.82 billion versus US$3.68Bln in 2017.

Woodside’s one-sixth share of LNG sales from the North West Shelf plant amounted to 667,682 tonnes, an increase from 593,338 tonnes posted in the previous quarter, though down on the 728,453 tonnes logged in the same three months of 2017.

Its Pluto LNG quarterly sales volumes rose to 1.21 million tonnes versus 1.02MT in the previous quarter and 1.07MT in the 2017 quarter.

Woodside’s volumes from the Chevron Corp.-operated Wheatstone LNG plant were also ramped up to 308,547 tonnes from 191,869 tonnes in the previous quarter and 19,291 in the same three months a year before.

Chief Executive Peter Coleman said the base business turned in another strong performance in the fourth quarter, with Wheatstone’s production continuing to exceed expectations and Pluto achieving almost full reliability.

“Production rose 10 percent compared to the fourth quarter of 2017, while sales revenue climbed 43 percent to US$1,419 million on the back of higher prices,” said Coleman.

“A highlight of the quarter was the start-up of the Greater Western Flank Phase 2 project in October, six months ahead of schedule and $630M under total budget,” added the CEO.

“In addition to the outstanding result in delivering Greater Western Flank Phase 2, we achieved significant milestones in the development of our next wave of projects, which will underpin Woodside’s future growth,” he said.

In the company’s West African operations offshore Senegal, it commenced front-end engineering design activities for its SNE Field Development Phase 1.

“Subsequent to the end of the quarter, the Senegalese Government approved the development’s Environmental and Social Impact Assessment,” said Coleman.

He added that key steps were also taken during the quarter towards the realisation of the company's vision for the Burrup Hub development, involving the proposed Pluto-North West Shelf Interconnector gas pipeline for the expanded Pluto LNG facilities.

“Bechtel has been awarded the front-end engineering and design contract for the proposed Pluto Train 2,” said Coleman.

“We are converting the preliminary agreement signed in the fourth quarter of 2018 to a fully-termed, binding agreement for the processing of Browse gas through the North West Shelf’s Karratha Gas Plant,” he added.

“We continue to demonstrate our commitment to supplying the Western Australian domestic gas market, signing sale and purchase agreements. We also delivered our first supplies from Pluto into the Dampier to Bunbury Natural Gas Pipeline,” stated Coleman.