Commercial Assessment of CNG and LNG as Transport Fuels 2015/16 FINAL Core Energy Group © 2016 2015/16 i Commercial Viability of CNG and LNG Transportation Table of Contents Table of Contents List of Tables and Figures ................................................................................................................................................ 3 1. Introduction ......................................................................................................................................................... 8 2. Executive Summary ............................................................................................................................................ 9 3. Methodology ..................................................................................................................................................... 11 4. Background ...................................................................................................................................................... 12 5. Infrastructure & Investment .............................................................................................................................. 35 6. Comparisons of Projected Fuel Prices ............................................................................................................. 39 7. Risks and Uncertainties .................................................................................................................................... 51 8. Strategic Advantages for South Australia ......................................................................................................... 53 9. Conclusion ........................................................................................................................................................ 56 References ..................................................................................................................................................................... 58 Attachment 1: CORE Inputs for RISE (Input-Output) Modelling .................................................................................... 59 Attachment 2: RISE Modelling Report (per DSD) .......................................................................................................... 64 Attachment 3: NGF Summary Sheet ............................................................................................................................. 67 Terms of Use ................................................................................................................................................................. 69 Core Energy Group © 2016 2015/16 ii Commercial Viability of CNG and LNG Transportation List of Tables and Figures List of Tables and Figures List of Tables Table 4.1 Global NGV Uptake ....................................................................................................................................... 22 Table 4.2 Australia’s heavy vehicle fleet relative to other vehicle types | ‘000 Vehicles ................................................ 23 Table 4.3 Australian Diesel Usage by State and Vehicle Type | ML .............................................................................. 25 Table 4.4 Additional Potential Gas Demand As a Function of NGV Uptake | PJ, Annual.............................................. 25 Table 4.5 Options for Marine Vessels to Meet Stricter Emissions Standards ................................................................ 29 Table 4.6 Larger Australian Ports: Increased Ability to Support LNG Refuelling ........................................................... 31 Table 6.1 Dated Brent Price Projections | USD/bbl........................................................................................................ 40 Table 6.2 CNG Cost Components in a Reference Oil Price Scenario | AUD, real......................................................... 42 Table 6.3 LNG Cost Components | AUD, real ............................................................................................................... 44 Table 6.4 Diesel Cost Breakdown in a Reference Oil Price Scenario | AUD, real ......................................................... 46 Table 6.5 NGV Vehicle Conversion/Price Premium | AUD ............................................................................................ 49 Table 8.1 The Contribution of Transport to South Australian GHG Emissions .............................................................. 55 List of Figures Figure 2.1 A compelling value proposition for South Australia that builds sectors and achieves long term goals ......... 10 Figure 4.1 Overview of a CNG Filling Station ................................................................................................................ 14 Figure 4.2 CNG Compressor ......................................................................................................................................... 14 Figure 4.3 Priority Panel and CNG Storage Vessel ....................................................................................................... 14 Figure 4.4 Typical CNG dispenser ................................................................................................................................. 15 Figure 4.5 CNG Fast-Fill Station Schematic .................................................................................................................. 15 Figure 4.6 International CNG Vehicle OEM’s ................................................................................................................ 16 Figure 4.7 LNG Refuelling Schematic: On-site Liquefaction .......................................................................................... 19 Figure 4.8 LNG Refuelling Schematic: Delivered LNG .................................................................................................. 19 Core Energy Group © 2016 2015/16 3 Commercial Viability of CNG and LNG Transportation List of Tables and Figures Figure 4.9 Australia’s Heavy Transportation and Freight Fleet | Total Vehicles ............................................................ 24 Figure 4.10 Australian Motor Vehicle Diesel Consumption: State Contribution and Vehicle Type Contribution ............ 25 Figure 4.11 Potential Added Gas Demand As a Function of NGV Uptake | PJ, Annual ................................................ 26 Figure 4.12 Australian GHG Emissions | Mt CO2-e, Quarterly ....................................................................................... 26 Figure 4.13 Australian Consumption of Liquid Fuels | Gigalitres ................................................................................... 27 Figure 4.14 Estimated GHG Reductions as a Function of Conversion Rates and Target Fleet | Tonnes of CO2-e...... 27 Figure 4.15 Carbon Pricing Range up to 2014 | USD/t .................................................................................................. 28 Figure 4.16 LNG Bunkering Possibilities ....................................................................................................................... 30 Figure 4.17 Adelaide Brighton Cement’s Accolade II CNG Vessel ................................................................................ 31 Figure 4.18 Energy Development’s Karratha LNG Facility ............................................................................................ 32 Figure 4.19 Typical LNG Supply Chain Integrated Several Applications ....................................................................... 33 Figure 5.1 Estimated Investment for CNG Refuelling Infrastructure | AUD/DLE ........................................................... 36 Figure 5.2 Estimated Investment for LNG Refuelling Infrastructure | AUD/DLE ............................................................ 38 Figure 6.1 Historical Crude Prices and Diesel TGPs ..................................................................................................... 39 Figure 6.2 Dated Brent Price Projections | USD/bbl ...................................................................................................... 40 Figure 6.3 CNG Cost Components (Refuelling Station with Distributed Wholesale Gas).............................................. 42 Figure 6.4 CNG Cost Components (Refuelling Station with Direct Wholesale Gas) ..................................................... 42 Figure 6.5 LNG Cost Components (Refuelling Station with Distributed Wholesale Gas) .............................................. 44 Figure 6.6 LNG Cost Components (Refuelling Station with Direct Wholesale Gas) ...................................................... 44 Figure 6.7 Relationship between TGPs and the Dated Brent Oil Price ......................................................................... 45 Figure 6.8 Relationship between Australian diesel TGPs and retail prices ................................................................... 46 Figure 6.9 Diesel Cost Components | AUD, real ............................................................................................................ 46 Figure 6.10 Ratio of Capital City Diesel TGP price to the National Average ................................................................. 46 Figure 6.11 Variance in Retail (Pump) Prices Across Australian States ........................................................................ 47 Core Energy Group © 2016 2015/16 4 Commercial Viability of CNG and LNG