Wesfarmers drives harder for LNG -

A DAY after committing to a $138 million liquefied natural gas (LNG) development program aimed replacing diesel fuel in power generation and transport, Wesfarmers says it may expand the program Australia-wide.
Wesfarmers energy chief Tim Bult said the company had been working on the project for five years and "we're looking at the potential to grow the business in the eastern states as alternative to diesel".
A number of potential locations for plants and distribution locations were being looked at outside of Western Australia, he said. The Kwinana plant will provide fuel for use in power plants at AngloGold Ashanti's Sunrise Dam and Barrick Gold's Darlot gold mines as well as for trucks used at mines and by transport companies.
Mr Bult said most of the output of the 175 tonnes-per-day plant has been contracted.
Gas will be transported to the Kwinana plant through the Alinta-operated Dampier-to-Bunbury pipeline.
Gas will be supplied from the John Brookes field off the coast of Western Australia, which Santos owns with Apache Corp. The first delivery is due in early 2008.
Wesfarmer's move will be the first significant attempt to commercialise LNG as a transport fuel. Mr Bult said LNG was not significantly more efficient than diesel, but it gained its benefit for users from low prices.
LNG does not carry fuel excise. However, like other alternative fuels, excise will be introduced progressively over the rest of the decade and will reach 12.5¢ per litre. This is still well below the current diesel excise level of 38¢ per litre.
Mr Bult said the increase in excise levels would not adversely affect the economics of LNG as a transport fuel. "This is a long-term investment driven by cost advantage and price stability benefits LNG offers over diesel," he said. As a result users would not be faced with wild fluctuations such as those experienced in the oil market in recent times.
LNG is made by cooling natural gas and it remains in liquid form until it is used in diesel engines.
Vehicles require modification to fuel storage and fuel delivery systems to operate on it.
Wesfarmers shares closed up 67¢ at $34.67.