LNG exports to China

Hi Age,
Yes, you're right, the diesel fuel produced is not actually distillate or "diesel". I oversimplified my message; in part due to my limited knowledge of the topic, but also to keep my message a bit less lengthy. Sorry.

What I was referring to is converting the methane in LNG to dimethyl ether. DME needs to be under pressure to remain liquid, so it is more like LPG than distillate. DME remains a liquid at 70 lbs/sq at room temperature; for LNG this figure is around 3000 lbs/sq in. Because of the high pressures or low temperatures needed to keep natural gas a liquid it is commonly used as a compressed gas instead, however for any sort of useable range this requires storage containers that are too large to be used for cars and refilling is a pain.

As I understand it, the modification to vehicles that are necessary to run on DME are no more difficult than for LPG. The high viscosity of DME requires pump modifications.

The point is that our petroleum reserves are running out and our 4WDing interest is going to become unaffordable. Oz is blessed with a resource and there are affordable technological solutions that can allow this to be used for our benefit. Instead we are selling it off for a dubious benefit.

There is a load of information on the web about DME.
eg. http://www.mhi.co.jp/tech/pdf/e406/e406348.pdf

Cheers Frank.

Yes, you can convert natural gas (methane) into synthetic diesel, which can be run with little or no vehicle modification. Its much cleaner than the stuff that comes out of a distillation plant (no sulfur). Try looking up 'Fischer-Tropsch' on the web.

The German army were doing it during the war to keep their vehicles going, it just hasn't been economic since then. Until recently perhaps... There was talk of it being done on the north-west shelf, but the LNG option must have been more economic at the time the decision was made.

You've also got to keep in mind that it would have been a company, not the government, deciding which option would suit them best.

NSW govt busses have tried it and the conversion that is needed is a distributor and spark plugs...Results are claimed to be unimpressive....

I think you'll find that the NSW govt were trially straight methane in their buses. Converting the methane to synthetic diesel takes a lot more processing equipment than the government would have been willing to pay for on their own.

Hi Scubaroo,

I just saw that price given in some web sites so it well may be incorrect. I haven't seen enough information about the deal to be able to work out just what the actual price is.

It's like the $10 per barrel figure quoted that we sell Bass Strait crude for. Who knows? Do we really buy oil for $70 a barrel and sell our own in the same quantity for $10 per barrel?

John Howard's web site says that we are exporting 3 billion tonnes per year for 25 years for a total of between 20 and 25 billion dollars. That's a maximum of 1 billion dollars per year.

The density of LNG is about half that of water, so a tonne would be 2000 litres. (water is 1 kg/litre so LNG is 2 l/kg) So in one year we are selling 6000000000000 litres for 100000000000 cents. According to me that is only 0.0167 of a cent per litre and this doesn't include the cost of transport and so on. So my rough calculation says the 4 cents per litre quoted on the web is many times what my dumb arsed calculation says based on the figures on John Howards web site.

OK, I must have done something wrong. Anyone care to show me my mistake?

Cheers Frank.

Oops. I found it myself. The amount is 3 million tonnes, not billion, so the price according to my rough calculation is actually around 16.7 cents per litre.

Millions of tonnes, not billions of tonnes.

One litre of LNG weighs 300 grams.

I just did similar calculations - but the figures I saw were 3.3 million tonnes per year for 25 years at $25 billion.

3.3 million tonnes is 11 billion litres a year, which for 25 years at $25 billion works out to be about 9c/L.... is that right?

Hmmm, further searching shows LNG appears to have different densities depending on the source - anything from 0.3 to 0.5kg/L depending on composition, temperature, and pressure, so a c/L calculation is a bt meaningless without knowing what the stuff we're shipping is. Price per kg works out to be 30.3c/kg of LNG, and a kg appears to be anything from 3.3 to 2L.

Commonly quoted figure is around 0.41kg/L, so a ballpark figure is 12.4c/L.

Go Johnny Go!!!!!!!!
Don't you just love democracy???????
The Senate is all yours Mr. Howard, the people said so..........

While howards and the libs are as useless as dogs balls on a mozzie, what are the options? there just arent any - and Howard knows that. why do you think he doesnt give a chit anymore about what people think?

Bloody hell!
Don't bring facts to this debate.
Anyway, I would have grave concerns about any deal which "locks in" future prices on ANY hydrocarbon fuel.
It's an incredibly precious resource and will go only one way in price.
Cheers

As someone who has bought coal, back in the days when I was a steamship magnate, it used to cost me $80 a ton at the mine addit, as it were, yet the Japs were buying it landed in Japan for AUD$32/ tonne....

Economies of scale... how many shiploads were the Japanese buying, versus a couple of truckloads? Labour involved in selling by the tonne direct from the mine versus export-scale loading etc? Sometimes apples ain't apples and you just can't compare.

Look here:
www.liquidcoal.com
and some discussion:
Site Link

"Diesel, Rudolf..
Although best known for his invention of the pressure-ignited heat engine that bears his name, Rudolf Diesel was an eminent thermal engineer, a connoisseur of the arts, a linguist, and a social theorist." (and much more)...

"In 1892-93 Diesel took out patents on an engine to operate on the cycle just described. Either powdered coal or liquid petroleum would be used as fuel. Powdered coal was included because of it's ready availability as a waste material of the Saar coal mines. Diesed planned to use compressed air to introduce the coal dust into the engine cylinder but found it difficult to control the rate of injection so that the maximum pressure in the cylinder after ignition would not exceed a safe limit. After the experimental engine was wrecked by an explosion in the cylinder, Diesel gave up the idea of using coal dust and devoted his efforts to the use of liquid petroleum. He continued, however, to use compressed air to introduce the liquid petroleum into the cylinder."

The above are brief extracts from the Encyclopaedia Britannica (Macropaedia, Vol.5, 1975 edition)...

As you can see, the idea of using coal dust to fuel a "compression ignition" engine is nothing new...

Mr Fawlty
Did you read them?

Yes...did I miss something that I should have noted? Or am I being subtley accused of throwing red herrings into the debate - which I would admit to doing as it sorts the men & women from the X dressers.

For LPG read LNG

Hi Willie,
From what I've read on the web it takes 140 litres of LNG to make 100 litres of fuel with the remainder being naptha. I don't know for sure, but I gather that the process is not significantly more difficult than that of producing LNG from the raw gas. I don't know that for sure; the impression I get from the stuff I've read is that a modified gas to liquid plant can do it and I think there are three plants in operation now in WA.

There are lots of factors that effect Woodside's decisions, not least of which would be the 38 cents per litre that needs to be paid to the government to sell the product as fuel here.

The thing that started me on this was reading in the Financial Review that the deal was costed by using the OPEC price of crude oil as a benchmark. The price of crude that was used was US$25. This fact alone means that we are getting somewhere around a third of what we should now and this contract is going to continue for 25 years at the same price. I don't know whether you've read about it; Howard has been making a big thing over the last couple of days about how we honourable Australians will stand by the contract. When I looked into it I saw all sorts of opinions that made it sound even worse.

Did Howard and Bush really believe the Iraq war would bring the oil price below $20?

The fact that Howard is so involved in discussing the ongoing arrangement for the deal leads me to think the government had a role in the negotiation of the contract. Deals such as this one just don't happen without our Department of Trade taking a big role.

I'd love to know what the real return to the Australian taxpayer/citizen is for the commonly owned gas reserve. The much quoted 3 cents per litre is possibly the amount the governments are receiving in royalty payments. I'd rather take my share in fuel!

I can't wait to see Four Corners do an analysis.

Sorry I don't know more. I sure know I smell a rat.

Cheers Frank.

Hi Frank ,
I was just reading an on article in EnergyReview.net on gas to liquid diesel production and I have attached a quote below . This may be the reason they are not doing it in Australia - a huge investment for a small market .

"GTL plants require massive investment and are energy-hungry to run, but Sasol maintains that high oil prices and environmental concerns make the fuel competitive. The company has said that Oryx GTL will make other companies and gas-rich countries think more seriously about the merits of making diesel from gas"

Thanks Willie.