Looking for growth opportunities in gas and power, Wesfarmers Energy began investigating LNG for the heavy duty vehicle (HDV) and industrial markets in 1998. At that time, market conditions were favourable for an alternative fuel, and given existing organisational capabilities in gas production, transport logistics and gas distribution infrastructure, Wesfarmers had a real opportunity to develop an LNG business in Australia.

Today, Wesfarmers is operating the 175 tonnes per day (t/d) Kwinana LNG production facility, an extensive HDV refuelling network and supplying LNG to two large remote power stations in Western Australia through its EVOL LNG brand.

Considerable time and innovation was applied over several years to prove the commercialisation of a domestic LNG business in Australia. The company undertook research trips to the United States and parts of Europe in the late 1990s to view developments around LNG being used as a transport fuel. It became clear that the use of LNG in a domestic context had many technical hurdles, which were considered as part of the project evaluation and feasibility process. Some of these included:

  • Vehicle conversion process from diesel to LNG
  • Vehicle maintenance and workshop training
  • Road taxes and excises
  • Uncertainty surrounding oil prices
  • Feed gas supply
  • Occupational health and safety
  • Government support for industry and end users.

A pilot 3.5 t/d LNG plant was commissioned in 2001 at Kwinana which fuelled five Kleenheat Gas trucks and a number of customer vehicles including Sands Fridgelines. Over the next five years Kleenheat and customer vehicles amassed over 12 million kilometres throughout Australia using LNG as the primary fuel. Board approval was granted for the construction of a 175 tonnes per day LNG production facility and associated downstream infrastructure at a capital cost of approximately $140 million.

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The LNG plant, commissioned in September 2008, currently supports 130 HDV, two remote power stations and a large industrial customer in Western Australia. With capacity to expand, Wesfarmers LNG says it is ready to deliver lower operating costs, environmental and other benefits to industry. Why is LNG a suitable alternative to diesel?

Wesfarmers envisages LNG becoming an essential fuel within the overall energy mix in Australia, as well as playing a key role in reducing carbon pollution emission levels.

A recent Federal Government trial using EVOL LNG in an LNG-fuelled HDV reported 25 per cent less greenhouse gas emissions than would be used in the equivalent diesel engine, with a 90 per cent reduction in particulate, matter and at least a 10 per cent reduction in nitrous oxide emissions.

In addition to the environmental benefits, Wesfarmers said that LNG vehicles can closely match their diesel equivalent, and can be fitted with sufficient LNG fuel tanks to suit journeys of up to 1,200 km.

Wesfarmers said that while the outlook for LNG is positive, there needs to be a greater focus by state and federal governments to assist the emerging industry.

The company stated that, as a transport fuel, LNG is competing in an industry segment that is yet to enjoy the same economies of scale as the traditional diesel segment.

“A domestic LNG industry requires the construction of new LNG production facilities, the establishment of truck refuelling facilities, the creation of distribution networks and infrastructure, and a change in fleet and driver behaviour, in addition to a preparedness to move away from diesel to an indigenous sources fuel,” said Wesfarmers Manager of LNG Brad Lowson.