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Woodside Backs Iron Ore Ships Run on LNG

Meg O'Neill LNG-MFI Board Member and COO of Woodside talks to The Australia about A looming “upheaval” in the international shipping industry could create a whole new industry in Western Australia

Copyright © 2019 The Australian

A looming “upheaval” in the international shipping industry could create a whole new industry in Western Australia, Woodside Petroleum chief operating officer Meg O’Neill says, with the oil and gas heavyweight throwing its weight behind plans to develop the Pilbara as a hub for LNG-powered iron ore carriers.

 New regulations from the International Maritime Organisation requiring the use of lowersulphur fuel across the world’s shipping fleet come into force in January. The imminent changes have sparked a flurry of activity as major shippers look for cleaner alternatives to the heavy fuel oil that has up until now been the main source of fuel for the world’s shipping fleet.

 

 “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 ,” Ms O’Neill told an American Chamber of Commerce lunch in Perth on Monday.

 

 Ms O’Neill cited fresh research from consultancy Energetics that estimated using LNG instead of heavy fuel oil would reduce the greenhouse gas emissions generated by the iron ore carriers that ship hundreds of millions of tonnes of iron ore from the Pilbara to Asia each year by up to a third.

 

 The switch would save up to 5.8 million tonnes of carbon dioxide

 

 — the equivalent, she said, of taking 1.8 million cars off the road — while sulphur oxide and nitrogen oxide emissions would fall by 95 per cent and 85 per cent respectively . “The environmental prize is large, s and so is the size of the economic prize,” Ms O’Neill said.

 

 “The potential market for LNG as a marine fuel is vast.”

 

 She said a full switch to LNG among the iron ore fleet would create around 4 million tonnes a year of additional LNG demand.

 

 “It’s potentially a very significant new market and would create a new industry in WA that could grow to a fleet of bunker vessels with hundreds of new high-skilled long-term jobs,” she said.

 

 “This is an opportunity to demonstrate industry collaboration at its best, using Australian LNG to fuel Australian resources exports.”

 

 Woodside has already partnered with iron ore heavyweights BHP, Rio Tinto and Fortescue Metals in a study of the potential for LNG-fuelled bulk carriers, while BHP earlier this month announced the world’s first tender for the LNG-fuelled transport of its iron ore.

 

 The potential cost of LNG as a fuel has been raised as a potential hurdle, but Ms O’Neill said she expected LNG to stack up with other cleaner fuel alternatives.

 

 “A lot of it comes down to what happens to the low-sulphur fuel price when that new IMO regulation kicks in,” she said.

 

 “If that price goes up, all of a sudden LNG is going to look pretty competitive.

 

 “We think it’s economically attractive .”

 

 ‘The environmental prize is large, and so is the size of the economic prize’

 

 MEG O’NEILL

 

 CHIEF OPERATING OFFICER, WOODSIDE

 

 Copyright © 2019 The Australian

 

 

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