Agreement for LNG Marine Production and Bunkering at Port Hedland

Port Hedland LNG bunking plan
LNG bunkering would be carried out at the anchorage at Port Hedland, Australia (Port Hedland)

Published Jan 5, 2023 5:34 PM by The Maritime Executive

As part of the efforts to expand the global LNG supply chain, a new project is launching to develop LNG marine fuel production and bunker at Australia’s Port Hedland. The project is part of the efforts to build out the global infrastructure for bunkering ships with LNG and providing a consistent supply of the marine fuel which is currently experiencing rapid adoption by a growing number of shipowners.

Pilbara Clean Fuels (PCF) headquartered in Perth, Australia announced that it entered into an agreement in December 2022 with Oceania Marine Energy, another Perth-based company formed to develop and operate an LNG and marine fuels bunkering business at major ports in Northwest Australia. PCF, an early-stage project development company is pursuing the development of an electrified liquified natural gas plant in Port Hedland, principally for the production of marine bunker fuel.

The companies highlighted the global need for LNG marine fuel while noting that Port Hedland is the world’s largest iron ore export port. They believe there will be strong demand for LNG from the ore ships serving the port. 

One of the challenges the shipping industry faces is a consistent supply of LNG marine fuel and sufficient volumes to meet the growing demand. DNV in its year-end analysis of shipbuilding and alternative fuels reported that LNG dual-fuel vessels continue to lead the orders, but that not all the ships capable of operating on LNG are currently using the fuel due to global supply and port infrastructure issues.

PCF plans a mid-scale LNG plant for the conversion of pipeline natural gas to LNG marine fuel. The “base case” plant capacity is 0.5Mtpa, with PCF saying that market analysis for Port Hedland indicates a potential demand of 1.0 Mtpa by 2030. A key feature of the project is a fully electrified plant with outsourced power supplied from predominantly renewable sources which would lower the overall life cycle carbon emissions that they could offer the shipping companies.

Oceania would undertake the bunkering operation using a purpose-designed LNG bunker vessel to be chartered from Kanfer Shipping of Norway. Kanfer is developing a global operation using smaller-sized vessels for the bunkering business. In a similar agreement, Kanfer last month announced plans for LNG bunker at the Balboa entrance to the Panama Canal and separately is also pursuing the development of LNG bunkering in Egypt and Brazil.

Under the terms of the agreement signed last month, PCF and Oceania have formed an exclusive relationship through which to collaborate to develop an end-to-end low-carbon profile eLNG production and marine vessel bunkering capability concept for the port of Port Hedland.  No target date was announced for when they might begin operations.