Strategic Direction

Domestic LNG Use Benefits Australia

Mobile LNG (MLNG) is dedicated to ensuring remote communities in Australia and in particular the mining sector, have greater opportunities to use Australian natural gas and LNG as fuel substitutes to the need for a continued use of expensive, imported diesel fuels.

Towards achieving this objective MLNG is utilising its Virtual Gas Pipeline® methodology in a series of national projects that will deliver a multi layered benefit to Australia’s economic, environmental and social futures. Broadly these benefits can be represented in the following areas:

  • Trade:

Through supply-side cost reductions; productivity improvements; improved export competitiveness; lowering import levels of fuel; and improving the National Balance of Payments;

  • Industry:

Creating new industry; new activity; new sustainable jobs; new training; skills and experience in high global demand areas, and reducing source production costs;

  • Security:

Providing improved national energy security and increased self-sufficiency to Australia;

  • Regional Development:

Through reducing the cost of living; increasing export and mining opportunities; increasing the longevity and viability of projects; and increasing employment opportunities;

  • Environment:

Generating a cleaner, healthier environment, cleaner work sites, less greenhouse gas emissions, no smog or airborne matter, no water table pollution, and no soil contamination;

  •  Transport:

Providing LNG fuel supply alternatives for the high fuel demand requirements of the road (trucking), rail and shipping sectors, including fuel bunkering facilities at key ports.

Advantages to Australia of using LNG to replace diesel

With the decreased need for costly imports of diesel, and the many supply side advantages that LNG will provide to exporter’s in reducing their supply cost structure and environmental footprint, the conversion to using LNG particularly for the high diesel consumers in the mining industry, is vitally important to Australia’s economic future and productivity.

The use of Australia’s own LNG as a substitute to diesel fuel has many ongoing benefits to the user, the national economy, the environment and to Australia’s international competitiveness. These benefits include:

  • Achieving up to a 25% reduction in fuel costs for remote power generation, heavy duty vehicle fleet use, mine haul vehicle use, which helps industry and exporters to be more competitive;
  • Immediately achieving a 25% reduction in Carbon Emissions and even larger reductions in associated pollutants;
  • Stabilising fuel costs for businesses and export operators, insulating them from the current market volatility of diesel pricing and the constant increase in prices stemming from world oil price fluctuations and variations in the currency exchange rate;
  • Improving the efficiency and longevity of equipment and reducing associated maintenance and equipment service costs and needs;
  • Increasing Australia’s fuel security by using Australia’s own natural resource and consequently reducing the need for Australia to import diesel. Last year the cost of importing diesel into Australia exceeded $40.2 billion;
  • Generating new and sustainable Industries;
  • Creating new employment and training opportunities, using leading technologies; and,
  • Assisting in the increased rate and level of regional development of Australia.
  • Assisting Australia’s shipping and export sectors towards complying with the new fuel efficiency and emission standards sweeping the globe (MARPOL- the main international convention aimed at the prevention of pollution from ships).

 

 

USE OF LNG IN MARINE APPLICATIONS

Approximately 90 per cent of global trade is delivered via shipping and unstable diesel fuel costs in the last decade (fuel expenses for shipping tripled between 2001 -2011) coupled with environmental concerns and the advent of MARPOL and similar international requirements on emissions and fuel efficiency, there has been a rapid rise of orders for LNG fuelled vessels worldwide.

Environmentally the 15 biggest ships produce more emissions than 760 million cars, and the ability of LNG as a marine fuel to arrest this trend has emerged as a key international focus and opportunity for growth that has seen rival technologies are being developed by manufactures Wartsila, Rolls-Royce, and MAN.

  • Wartsila, one of the world’s biggest engine makers, expects 10 per cent of ships calling on North and Baltic Sea ports to be running on LNG by 2015 – a tenfold increase in vessels currently using the fuel.
  • Rolls Royce has recently completed a 20 million hour trial on LNG fuelled engines.

While the marine sector uses only 1/5th the amount of fuel used by heavy duty vehicles, a single cargo ship uses approximately the same amount of energy as 100 long-haul trailer-truck combinations.

With this change comes the need and opportunity for Australia and other nations to provide LNG fuel bunkering facilities at key port facilities.

There are a number of ways that LNG bunkering can occur, and bunkering options include a shore-to-ship transfer from a permanent LNG installation, a truck-to-ship transfer, a ship-to-ship transfer, and/or the exchange of LNG ISO-tainers which double as the fuel tanks for the ship.  These options are shown in the diagram below:

 

 

 

 

 

 

 

Mobile LNG is working with key regional ports in WA and the NT towards the implementation of LNG fuel bunkering facilities to add to the regional development and prosperity of these regional areas.

VIRTUAL GAS PIPELINE®

The wider use of Australian natural gas as a substitute to the costs of importing diesel fuel offers many significant and multi-layered benefits to the environment, industry, regional Australia, and to the Australian economy.

Until now the limiting factor to the wide spread use of natural gas in remote and regional areas has been that access to natural gas has been limited to existing gas pipeline routes, and that the provision of new gas pipelines requires long lead times for planning, land acquisition, and high up front capital costs for construction. In regional and remote Australia gas pipeline construction is often also complicated by the vast dispersion of end users, issues of cultural or environmental sensitivity of required routes, and by the short operational life of the mine operation requiring the supply.

To overcome these impediments, Mobile LNG developed a highly flexible and adaptive natural gas supply and distribution system referred to and registered as the “virtual gas pipeline®”. This methodology can deliver the benefits of LNG use to the market more expediently, more affordably, and to a more diverse regional area than conventional pipeline supply.

The following video provides a summary overview of the directions of Mobile LNG’s virtual gas pipeline® methodology:

 

THE VIRTUAL GAS PIPELINE® VIDEO

[Click image to start virtual gas pipeline video]

MLNG’s virtual gas pipeline® involves the integrated elements of:

  • The creation and construction of LNG production hub facilities in key regional centres, for the production, storage and distribution of LNG to the surrounding environs; and
  • The establishment of an inter-connected multi-modal distribution system capable of meeting the unique supply needs of the remote industries or communities, that is capable of deliveries in various quantities and frequencies specifically tailored for each industry and community need and achieved by road, rail or sea transport methods.

The use of Australia’s existing natural gas resources and converting them into LNG for wider distribution and domestic consumption assists to increase the intrinsic value of Australia’s existing resources without any impediment to ongoing major export programs, and is achieved without the need for any government intervention in the market by way of a gas-reservations policy quota.

The virtual gas pipeline® will also create new levels of benefits to regional Australia from the environmental and economic advantages of having access to the benefits of natural gas, while simultaneously providing new employment, growth and training opportunities to the regions.

NATIONAL PROJECTS -THE VIRTUAL GAS PIPELINE®

LOCATIONS

MLNG’s national roll-out of virtual gas pipeline® projects will initially focus on establishing LNG production hubs in the following 4 regional areas;

  • Darwin [NT] – a solution to remote power generation needs of Northern Australian communities and mining operations;
  • Port Hedland [WA] – required for the needs of the WA mining industry which is centred in the Pilbara and Mid-West and responsible for most of Australia’s export wealth;
  • Kalgoorlie [WA] – to assist the WA gold mining, agriculture and regional transport industries in particular and to make economic and supply side reforms and efficiencies to assist in gaining new export markets;
  • Adelaide [SA] – required for the needs of the South Australian economy, particularly mining, export, transport and tourism industries as the gateway to export facilities.

FUNCTIONS OF EACH HUB

Each of the four virtual gas pipeline® projects will have a production and distribution hub with the following functions:

  • The production and storage of LNG. Indicatively, this will be 400 tonnes per day per plant of LNG. The LNG will be stored in robust ISO-tainers in readiness for distribution to customer needs in the region.
  • The distribution and transportation of LNG to the client premises where it can be used as LNG, regasified to natural gas, or converted into electricity in generators. This transport network will involve a multi-modal network of deliveries by rail, road, or sea depending on the individual needs of each customer. The quantities will be tailored to specific clustomer requirements and provided in batches of multiple self contained ISO-tainers each holding approximately 20,000 or 40,000 litres of LNG.
  • Each of these four Virtual gas pipeline® production hubs will;
  • Require a capital expenditure of approximately $250 million for their individual construction and establishment; and;
  • Each hub will be providing approximately 400 tonnes per day of LNG which is sufficient to substitute for what was 206 million litres per annum of diesel fuel use.

COLLECTIVE BENEFIT OF 4 PRODUCTION HUBS

MLNG’s four LNG production hubs in the virtual gas pipeline® projects will collectively:

  • Represent a $1 billion investment in Australia’s economic future, and are forecast to;
  • Create 4,000 new positions;
  • Reduce regional fuel costs by $330 million per annum;
  • Reduce Australia’s need to import diesel fuel by $636 million per annum; and,
  • Reduce greenhouse gas emissions by nearly 500,000 tonnes per annum.

BENEFITS OF USING LNG TO REPLACE DIESEL

ECONOMIC BENEFITS OF LNG USE

Significant economic benefits will be achieved for Australia, in the use of LNG to displace the need to import diesel fuel.

At a macro-level using LNG to replace diesel fuel imports, will;

  • Decrease the cost of imports [less diesel required] on the economy. Last financial year the cost of diesel fuel imports to the Australian economy exceeded $42 billion; and,
  • Increase export revenue [achieved through reductions and improvements in supply side cost]. Australian LNG when used as a fuel substitute for diesel is approximately 25% less expensive,

and this offers a significant reduction in source production costs of export goods and commodities, and will permit the pursuit of new markets and export quantities.

At a micro-level, economic improvements are achieved for Australia through providing LNG fuel to customers and communities at a considerable saving to their present costs of using diesel. The minimum scope of savings this is anticipated to deliver is evidenced in the following simple case study examples. These outcomes are from actual client case studies for Australian businesses. Results can vary depending upon eligibility for Diesel Rebate subsidies:

ENVIRONMENTAL BENEFITS OF LNG USE

The use of LNG to replace diesel fuel use will achieve significant reductions in greenhouse gas emissions and even greater reductions in harmful particulate emissions.

International studies such as those of the USA’s Energy Information Administration (EIA), reveal a change to LNG will achieve the reductions of; 28% in CO2 emissions, right through to 100% reductions in mercury emissions, sulphur dioxide emissions and 100% reduction is soot and particulates emissions.

The implementation of MLNG’s first 4 virtual gas pipeline® and production hubs to replace the need to use diesel, is alone conservatively estimated will prevent nearly 500,000 tonnes of CO2 annually, from entering into the atmosphere.

BarChart

LNG Versus Diesel, Comparison

MOBILE LNG’S VIRTUAL GAS PIPELINE® LNG PRODUCTION FACILITIES

The following table progressively demonstrates the benefits that a single MLNG virtual gas pipeline® project will have in displacing diesel fuel consumption, and then the impact of MLNG’s Stage 1 where MLNG will have 4 LNG virtual gas pipeline® projects in operation.

The scenario then where 27 virtual gas pipeline® projects and their production plants are operating is also shown, where the LNG production achieved would be responsible for displacing 25% of the annual 22.6 billion litres of diesel currently consumed in Australia each year. A saving to the Australian economy of nearly $6 billion per annum would result.

Source: Australian Petroleum Statistics June 2013, Bureau of Resources and Energy Economics.

Table

The above table is presented in detail as a pdf in MLNG’s Website under the Menu section of “News and Information”.

DRIVERS FOR CHANGE

The need for Australia to implement a change in its dependency on diesel fuel use has been ever increasing, and has been motivated of late by:

  • The significant cost cycles and variations in diesel fuel prices and the ripple effects and impacts this causes on stability and planning within industries and the Australian economy as a whole;
  • The demand by industry for lower production costs and more energy efficient alternatives to diesel fuel use;
  • The need and demand for low carbon solutions as a means towards attaining significant reductions in greenhouse gas emissions for our environment and for compliance with international standards;
  • A national need to increase Australia’s energy security by its reducing dependence on imported fuels and to simultaneously make better use of Australia’s own, abundant gas resources as a protection against price fluctuations and future surges in supply;
  • The continuing drive to improve supply side economics and to achieve production cost reductions with in Australia, to benefit both the domestic economy as well as assisting to create new export markets through increased competitiveness of end products;
  • The planning and proposed projects currently under way or in in consideration in other countries, that could challenge Australia’s future export trade;
  • The economic, environmental and social benefits that could be delivered to regional Australia through cost reductions and development of Australia’s own natural gas resources.

THE NEED FOR CHANGE

A detailed case analysis of the opportunities, benefits and need for Australia to make the change to utilising its own natural gas resources more widely as a fuel alternative, and to be less reliant upon the importation of expensive and environmentally harsh diesel fuels is provided in the document titled “Information Memorandum — The Need for Change”.

A copy of this report is available as a complete pdf document, under the Menu section of “News and Information”.

OPPORTUNITIES FOR AUSTRALIA’S ECONOMIC GROWTH AND ENERGY SECURITY

Australia’s current position relative to other countries, and the case for Australia to participate in global trends and to make more prudent use of its natural gas resources in order to achieve greater energy security, and to generate economic growth to benefit future generations, is set out in a summary PowerPoint presentation titled “Opportunities for Australia’s Energy Security and Economic Growth”.

This document is an extract from a series of seminars delivered by MLNG to state branches of the Australian Institute of Energy.

A copy of this report is also available as a complete pdf document, under the Menu section of “News and Information”.