LNG to overpower diesel on mine sites

With fuel costs rising and companies focusing on the challenges of reducing C02 emissions, many are heralding the LNG boom as a way to offset the energy issues facing the mining industry.

But with big upfront capital costs, and technological advancements some years away, is LNG ever likely to replace diesel as the predominant fuel source on mine sites?

It is estimated that the LNG boom in Australia is worth $180 billion in planned investments with many predicting the projects will lift Australia from the fourth largest LNG producer to the first, knocking Qatar off its perch.

With major companies like Shell, Woodside and BP spending billions on LNG projects, it is clear they expect the gas to become not only a major revenue raiser in exports, but to also be used more commonly on Australian soil

Energy giant Shell are looking to introduce LNG-powered fleets at Australian mines as part of a push to increase natural gas use beyond the export of LNG, with BHP and Rio Tinto both looking to implement the technology.

The two big miners are said to be looking at LNG-powered fleets for their West Australian operations as a way to offset high energy costs.

A spokesman for Rio told The Australian that it was looking at dual fuel technologies for the use in the Pilbara.

"There are some real challenges with the impact on payload, refuelling frequency and certainty over supply sources, but our work in this area remains ongoing," he said.

Shell says natural gas has many advantages over diesel: it is cleaner, abundant in Australia, and cost competitive. The company said as a result it can lead to reductions in greenhouse gas emissions: proving to be a major factor in a company’s decision to make the switch.

Stuart Macdonald, a global LNG applications technologist working for Shell pointed out the advantages of using the fuel in the mining industry at Shell’s Technology Forum last year.

Macdonald said a 27 % reduction in green house gas emissions from well to wheel was apparent when using engines how they stand now and said this will improve as new technology is developed.

And with billions of dollars of untapped gas available in Australia, Macdonald said LNG was set to become a stayer in the fuel market as it begins to compete with the volatile oil sector.

“If we zoom in on the Australian market there’s an abundance of supply,” he told Australian Mining

“It’s a sustainable fuel, it’s not just a fix.

“It’s going to be a significant part of the fuels portfolio.

“Its cost competitiveness and its value as a cheaper fuel is not just something we see as a driver for the coming two to five years but for many decades to come.”

However, it is expected that any move to LNG-powered trucks is at least five years away with supply, transport, storage and truck conversion the main hurdles in its implementation.

Modifying engines and tanks, the use of the gas in high horse power engines and its energy content compared to diesel are all challenges the gas faces in its application on mine sites.

To this end, Westport Resources Australia and Caterpillar have joined forces to develop natural gas fuel systems for mine trucks and EMD locomotives.

“We recently signed an agreement with caterpillar to jointly develop direct injection engines specifically for the mine trucks the 793, 795 and 797 – and also part of that agreement is with EMD for the MD&10 engines used in the locomotives,” Westport Innovations Australia managing director Bruce Hodgins said.

The new joint venture is aimed at revolutionising the way the mining industry consumes energy.

Hodgins told Australian Mining that while the technology was some years off, he expected LNG to become a predominant fuel within the mining industry.

“For certain segments of mining and for certain areas it will become dominant, and frankly I think coal is one of those areas where you will see it being taken up as the predominant fuels,” he said.

“This is something we all need to partnership on, so we are working with fuel suppliers, engine technology people, the OEMs, customers and government regulators to address a lot of these (issues).

“We think most of the engines that are going to get used in the mining sector for power generation will tend to go for the more direct ignition approach for the fuel efficiency gains.”

However it seems no one is ready to estimate how much these new technologies are going cost, with many predicting the initial capital expenditure for machines like this will be quite high.

Hodgins did say that on average, companies investing in the new machines could expect a two year return on investment.

“The OEMs who are offering the vehicles to customers are having those discussions too, so it’s going to be happening over these next couple of years,” Hodgins said.

Kim Palfrey, general manager of projects at New Hope Group, told Australian Mining that he expects the technology to be slowly phased in by Australian companies.

“LNG is some way off yet and will be expensive to implement,” he said.

“It will mean that this technology will more likely be phased in over time due to the extent of modification required convert to LNG power.”

However Palfrey added that the gas was an important chapter in Australia’s fuel needs.

“It offers significant advantages to Australia as the mining and transport industries convert  to LNG powered equipment.

“We should be somewhat protected from the volatility of the fossil fuel markets,” he said.

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