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Fortescue announces natural gas agreement

Fortescue has announced the signing of a long term gas transportation agreement to reduce operating costs in the Pilbara.

The agreement will see the construction of a 270 km long Fortescue River Gas Pipeline to deliver gas from the existing Dampier to Bunbury Natural Gas Pipeline to Fortescue Metals Group’s 125MW Solomon Hub power station.

The pipeline will cost $178 million construct, and be built by Monadelphous and the DBP Development Group (which is a joint venture between the DUET Group and TransAlta subsidiary TEC Pilbara).

Construction is slated for completion later this year, and will be operational by early next year.

The development of the pipeline is part of the miner’s wider strategy to cut energy costs and reduce carbon emissions across its operations.

As part of this pipeline development FMG is also converting power station from diesel to gas, which is predicted to save the miner around US$20 million annually.

The miner was able to easily do this as it had already installed dual fuel turbines at the site in line with the eventual plan to convert to gas.

A 20 year, 100% take-or-pay gas transportation contract has been signed between the joint venture DBPP Group and the miner, with Fortescue already securing Shipper Rights under the Gas Transportation Agreement.

FMG CEO Nev Power welcomed the agreement, stating that “the pipeline to Solomon allows Fortescue to reduce operating costs and play a significant role in cutting emissions by switching stationary power generation from diesel to natural gas”.

“The Fortescue River Gas Pipeline also represents a significant step in the gasification of the East Pilbara to the lasting benefit of the State of Western Australia.

“TransAlta, our existing partner at Solomon, and DDG have outstanding reputations with proven capabilities within the energy infrastructure industry. Their expertise will allow Fortescue to focus on its core business of efficient, low cost delivery of iron ore to customers in China and South East Asia.”

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