CNG/LNG and Diesel Displacement in the Pilbara AGIT Gas Speak September 2015

Roadmap Landscape Pilbara Iron Ore Details Facilities Micro Thoughts WA Details Facilities Micro LNG & CNG Thoughts Outlook Diesel

Alinta Energy NT QLD WA SA NSW VIC ~ 800,000 customers nationally EAST COAST INTEGRATED Retail Gas and Electricity, ~160,000 customers (VIC/SA) Braemar, Power Generation, 502 MW (QLD) NT QLD NSW SA VIC WA TAS CONTRACTED ASSETS Bairnsdale, Power Generation, 94 MW (VIC) Glenbrook, Power Generation, 112 MW (NZ) ALINTA WEST Retail Gas and Electricity, ~640,000 customers Pinjarra, Power Generation, 280 MW Wagerup, Power Generation, 380 MW PILBARA ASSETS Port Hedland, Power Generation, 210 MW Newman, Power Generation, 178 MW NZ ~ 800,000 customers nationally ~ 1,750 MW generation assets Existing presence in the Pilbara

WA Energy Landscape 1970’s COASTLINE LENGTH 20,871 km 1980’s 1990’s Perth Basin Gas Parmelia Pipeline 1970’s COASTLINE LENGTH 20,871 km North West Shelf Gas DBP Pipeline Commissioned 1980’s Varanus Island Gas Goldfields Gas Pipeline SECWA Split 1990’s DBP Pipeline Expansion Electricity Competition Gas Competition 2000’s Devil Creek Gas Macedon Gas Gorgon Gas Wheatstone Gas Mondarra Storage 2010’s

Pilbara Focus Kimberley Pilbara Gascoyne Mid West Goldfields

Iron Ore Cost and Revenues Declining ore prices and demand for iron ore from China… Reduction in revenue needs to be offset by a reduction in input costs… Largest Producers down the bottom of the cost curve running gas pipelines or transmission lines for electricity generation… Smallest Producers need to cut down input costs to remain viable… at 31 Dec 2014

An Energy Intensive Operation = 1 diesel truck per day 36,645 Btu = 1 litre 1.292bn Btu = 35,528 litres 12 mtpa or 2.5 trucks per day 225 mtpa or 50 trucks per day http://www1.eere.energy.gov/manufacturing/resources/mining/pdfs/iron.pdf

LNG and CNG Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4) Converted to liquid form for ease of storage or transport It takes up about 1/600th the volume of natural gas in the gaseous state The natural gas is then condensed into a liquid at close to atmospheric pressure by cooling it to approximately −162 °C Specially designed cryogenic road tankers are used for its transport The energy density of LNG is 2.4 times greater than that of CNG or 60 percent of that of diesel fuel LNG 1:600 Compressed natural gas (CNG) CNG is made by compressing natural gas (which is mainly composed of methane, CH4), to less than 1 percent of the volume it occupies at standard atmospheric pressure It is safer than other fuels in the event of a spill, because natural gas is lighter than air and disperses quickly when released It is stored and distributed in hard containers usually in cylindrical or spherical shapes CNG-powered vehicles generally have lower maintenance costs than other hydrocarbon-fuel-powered vehicles CNG has a lower cost of production and storage compared to LNG as it does not require an expensive cooling process and cryogenic tanks CNG 1:200

Opportunities in the Pilbara $/Tonne Capital Cost MICRO SMALL-SCALE EXPORT-SCALE mtpa MICRO SMALL SCALE ~ 12 tonnes per day capacity ~ 0.5 TJ per day ~ 200 tonnes per day capacity ~ 10 TJ per day

Micro LNG Examples http://www.galileoar.com/en/lng

Micro LNG Examples GE Oil & Gas is promoting its new LNG In A Box as “a small-scale, plug-and-play, re-deployable liquefied natural gas fueling solution based on proven technology that can help accelerate the use of natural gas as a cost-effective, cleaner transportation fuel.” https://www.geoilandgas.com/distributed-gas/processing/small-scale-lng-liquefaction-plant

Small Scale LNG and CNG Located in the Kwinana Industrial area, south of Perth  Designed for the production of 175 tonnes per day - equivalent to 240,000 litres of diesel per day Gas is delivered to the Kwinana site from the North West gas fields via the Dampier to Bunbury Natural Gas Pipeline The LNG plant includes a 4000 m3 LNG storage tank and LNG truck loading facility http://www.evollng.com.au/about/our-plant Located in Karratha, Western Australia Energy Developments has built and operates a 200 tonnes per day LNG production facility as part of the West Kimberley Power Project (WKPP). Five power stations, four fuelled by LNG, a 200-tonne-a-day LNG plant and associated transport infrastructure. http://www.energydevelopments.com.au/01_cms/details.asp?ID=92 Located in the Boodarie State Development Area, Western Australia, with direct access to the Great Northern Highway The project in its initial phase will deliver ~11 TJ per day of CNG, replacing up to ~300,000 litres of diesel per day with natural gas Six quad road trains on a continuous cycle from its Port Hedland CNG facility http://www.sub161.com.au/port-hedland-cng-facility/

Considerations Diesel Prices Will low oil prices continue? Location Local solution or centralised shared solution? Ownership Structure Does the owner have access to capital? Mine Life Is it worth investing in new capital? Contract Term Is appropriate to commit to take or pay arrangements? Commodity Prices Will iron ore prices recover and if so, when? Carbon Will a carbon scheme be reintroduced?

EXTRA EXTRA Media Read all about it! http://www.miningaustralia.com.au/features/lng-to-overpower-diesel-on-mine-sites http://www.motoringmatters.com.au/news/new-mine-truck-fuel-solution-to-displace-diesel http://www.thenation.com/article/hawaiis-governor-dumps-oil-and-gas-in-favor-of-100-percent-renewables/ http://www.afr.com/business/solar-on-path-to-beat-diesel-lng-to-power-remote-mines-20150729-gin8u1 http://www.abc.net.au/local/photos/2015/04/13/4215426.htm

The Future Technology Driven Government Policy Industry Led Solution

Appendices

1:600 1:200 CNG and LNG Process Natural Gas Field Compressor Station Liquefaction Plant Compressor Station 1:600 1:200 Virtual Pipeline Virtual Pipeline Storage Plant Storage Facility Haul Trucks Power Generation Fuel

Diesel Process DOMESTIC INTERNATIONAL Extract Crude Oil Shipping Oil and Gas Field DOMESTIC INTERNATIONAL Refining Refining Storage Facility Storage Facility Shipping Diesel Transport Diesel Transport Power Generation Fuel Haul Trucks