Woodside eyes developing market for Western Australia’s LNG to fuel ships

Woodside is seeking to develop a market for LNG as a seaborne transport fuel in the state of Western Australia amid growing supply in Australia’s northwest region that now has four LNG export plants with a combined capacity of more than 60 million mt/year, the company said Tuesday.

Demand for LNG from ships at Pilbara ports alone, where Woodside’s LNG operations are based, could amount to up to 4 million mt/year, the company said.

“It’s a blindingly obvious market for WA to try to capture, with the potential for a whole new industry and the jobs and investment that brings. And now is the time to be going after that opportunity,” Woodside’s chief operations officer Meg O’Neil said on Monday.

Woodside in April opened its Pluto LNG truck loading facility, which is capable of loading up to 200,000 mt/year of LNG and displacing up to 300 million liters of diesel.

“Woodside’s initial focus is on supplying trucked LNG to mining operations and communities in the Pilbara, Kimberley and elsewhere in WA for power generation. Trucked LNG will also be used to supply coastal marine vessels, including the LNG-powered Siem Thiima, which joined Woodside’s fleet in 2017,” a spokeswoman for Woodside said via email Tuesday.

“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. Woodside is also planning to develop infrastructure for suppyling LNG to the international shipping industry, particularly iron ore carriers on the busy trade route from the Pilbara to Asia,” she said, noting that around 3 billion liters/year of diesel is imported into the Pilbara, mainly for the mining industry, and the ships exporting iron ore currently consume about 5 billion liters/year of heavy fuel oil.

Two weeks ago, mining giant BHP issued the first LNG-fuelled bulk carrier tender, which is to ship up to 27 million mt of iron ore, or about 10% of its exports.

The tender is part of the Green Corridor joint industry project, an industry-driven initiative for the transportation of iron ore and coal on the Australia-China route.

Woodside is part of the project, along with BHP, Rio Tinto and Fortescue Metals Group.

“It’s a significant move and this [BHP] tender will no doubt be hotly contested,” O’Neil said.

“These 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. So, they don’t need to waste time and fuel diverting to find LNG elsewhere in the region,” she added.

She noted that Woodside’s Burrup Hub growth strategy is not contingent on the market for LNG fuels taking off, adding: “We know there will be enough global demand for LNG to soak up the supply from both Scarborough and Browse.

“The LNG fuel opportunity is an adjacent opportunity. You might say it’s the cherry on top,” she added.
Source: Platts