Aussie Mid-West LNG targets second-phase FID in H2
Mid-West LNG (MWLNG), a unit of Perth-based Clean Energy Fuels Australia (CEFA), aims to take a final investment decision on the second phase of the Mid-West LNG hub in the Mount Magnet region of Western Australia (WA) in the second half of 2021, a company official told NGW. Phase one is progressing well and the first LNG from the project is expected in October this year, he said.
“All approvals required for the Mid-West LNG hub development have been obtained. The site is cleared ready for development. The first LNG production is scheduled for October 2021. We are currently actively working on deployment of Phase 2,” Romano Bernhard, general manager, commercial, CEFA said.
Long-term natural gas supply and transportation agreements are in place for the first phase, Bernhard said, while LNG plant and LNG logistics and storage equipment contracts have been awarded. MWLNG will source the gas from the broader WA domestic gas market, under long term gas purchasing arrangements.
CEFA is developing small-scale LNG infrastructure assets for remote mining operations and communities within Australia. The Mid-West LNG hub is expected to supply in excess of 500 metric tons/day LNG when fully ready.
The LNG plant at the hub will be based on a mixed refrigerant cooling process. The hub will service mainly remote mining operations and communities in the Mid-West and Kalgoorlie areas in WA. Phase 1 development has a capacity of 50 mt/day of LNG, and Phase 2 will increase overall production capacity to 250-500 mt/day of LNG, subject to market demand.
MWLNG is not only targeting remote mining customers, but also remote communities and towns that are not connected to electricity and/or gas pipeline infrastructure. The primary use of LNG would be to replace diesel in power generation or in mobile equipment like mine haul vehicles, locomotives and marine, Bernhard said. Other uses of LNG are heating in domestic use or for boilers in industrial applications.
Customers locked in
MWLNG has signed long-term LNG supply contracts with two WA miners so far. The first supply agreement is with Silverlake Resources for its Deflector gold mine. The hub will be supplying around 30 mt/day of LNG to Deflector.
It has also roped in WA Kaolin under a 15-year, A$22mn ($17mn) contract. MWLNG will supply 15 mt/day of LNG to WA Kaolin for its Wickepin Kaolin project. The LNG will be used to fire the rotary kiln at Wickepin that dries the kaolin ore. The contract, which includes the supply of commissioning gas from September 1, 2021, to the end of 2021, will start on January 1, 2022, and will run for 15 years with reviews at year five and year 10, and provides for two options to extend for a further five years respectively. The contract provides for the storage and revaporisation infrastructure, including delivery of LNG by a virtual pipeline.
Bernhard said MWLNG is in talks with more potential customers, mainly miners in the Mid-West and Kalgoorlie regions. These customers will be using the LNG mainly for the displacement of diesel with LNG in power generation and mobile equipment applications, he added.
Port Hedland LNG hub
CEFA is also looking at developing a second hub in WA at Port Hedland in the Pilbara region. However, the progress of this project will depend on market demand.
“Port Hedland LNG development is subject to market demand for LNG for stationary and mobile equipment applications, similar to the Phase 2 Mid-West LNG hub development,” Bernhard said. If the Port Hedland LNG hub proves feasible, it will have an LNG production capacity of 250 mt/day, he added.
CEFA is working on the project to convert large mining equipment to dual fuel LNG/diesel as well. It is working closely with one of the biggest original equipment manufacturers in the mine haul vehicle space to deploy a proposition that would enable CEFA to offer an integrated service to interested mining companies that would include long-term supply of LNG and provision of diesel gas blending kits for MHVs, under one contract with CEFA.
“This has large market potential. LNG can provide substantial fuel cost savings and carbon emissions reductions compared to diesel. LNG is a proven technology that is available today and can support the mining industry in their decarbonisation efforts,” Bernhard said.