Herb Elliott Port in Northwest Australia. (Source: Fortescue Metals Group Ltd.)
Western Australia mining magnate Andrew Forrest has promised to step on the gas in a drive to ensure that plentiful supplies from the gas-rich western side of Australia can rally to the rescue of energy-starved markets in the eastern states of the country.
Speaking at the Boao Forum in China, the Fortescue Metals chairman said he was prepared to pull out all the stops to ensure that gas could be transported from the west to the east coast—a distance of more than 4,050 km (2,500 miiles)—as early as the end of 2019.
The billionaire iron ore magnate claimed that his company would be able to move swiftly and decisively and that only government approval, or lack thereof, could stop his plans to ship LNG from the North West Shelf to a New South Wales port, potentially Port Kembla or Newcastle. Forrest is looking into the possibility of transferring LNG cargoes into a fixed vessel operating as a regasification terminal in port and then into existing pipelines. The distance from Karratha, where the Woodside-led North West Shelf LNG plant is located, to Newcastle is 5,308 km (3,298 mi.).
Forrest’s great uncle, Sir John Forrest, was the first premier of Western Australia and it was under his watch more than 100 years ago that a critical 600 km (372 mi.) water pipeline was constructed from Mundaring Weir, north of Perth, to Kalgoorlie in the Goldfields, where it sustains 100,000 people today.
The water pipeline was designed by Irish engineer C.Y. O’Connor, who endured extreme criticism from politicians and the press sceptical about the project and its cost. This criticism took its toll on O’Connor, who committed suicide in the sea at Fremantle—where the beach is named after him—and never got to see his work celebrated as a big success.
In 1903 the water pipeline was built at a cost of AU$5 million (US$3.9 million), but if it was constructed today the cost has been estimated at AU1.5 billion (US$1.17 billion).
Forrest, affectionately known as “Twiggy,” is the founder of the world’s fourth largest iron ore exporter has a diversification vision for Fortescue with gas from the North West Shelf prominent in his plans. The only poser is how to get the resource from the west to the east coast and whether or not a pipeline would be the most economical solution.
Forrest has already established a joint venture, Australian Industrial Energy, with Japan’s Marubeni and Jera as minority shareholders. Forrest holds a controlling interest in AIE through his private company Minderoo.
The release of a pipeline study launched by Australian Energy Minister Josh Frydenberg is imminent, but Forrest has suggested he would like to push for a final investment decision this year for construction of his “virtual pipeline”—encompassing LNG cargo vessels and offshore regasification terminals.
Forrest led the Australian delegation to China with a group that included Woodside CEO Peter Coleman, but no senior government members were present with Prime Minister Malcolm Turnbull and Foreign Minister Julie Bishop notably absent against the backdrop of the simmering US-China trade war.