Ferus eyes LNG sales to Canadian mining projects

OREANDA-NEWS. September 22, 2016. Ferus Natural Gas Fuels has signed preliminary agreements to sell LNG to two proposed mining projects in northern Canada. The supplies would come from a planned liquefaction plant in Fort Nelson.

One of the non-binding deals was signed with Vancouver-based Western Copper and Gold for its planned Casino Mining project in the central Yukon territory. The project would mine copper, gold, molybdenum and silver.

The other preliminary agreement is with the Canadian subsidiary of Chinese mining firm Yunnan Chihong Zinc & Germanium, which is developing the Selwyn project to mine zinc and lead in the eastern Yukon. The area has the largest undeveloped zinc and lead deposits in the world.

The projects will use the LNG for power generation and mining operations.

The Fort Nelson LNG production facility is slated to come on line in two phases, each with capacity of 300,000 USG/d, equivalent to 25mn cf/d (708,000m?/d) of gas, in 2020 and 2022. Each phase is equivalent to about 175,000 USG/d of diesel.

The first phase will supply the Casino project and the second the Selwyn facility, Ferus told Argus today. The Casino project is expected to operate for 22 years and the Selwyn project at least 10 years. Both projects are in the approval process.

Ferus will seek construction approval from BC regulators for the Fort Nelson plant.

With low natural gas prices from booming shale gas production, a number of North American industries that use oil-based fuels for high horsepower engines are considering converting to LNG to reduce emissions and potentially cut costs. Such industries include mining, exploration, drilling, trucking, marine bunkering and rail. But the momentum for such conversions has been significantly slowed in North America by falling oil prices since mid-2014, which have eroded potential economic gains from conversions.

Ferus produces and distributes cryogenic gases to various industries in Canada and the US. It also owns Eagle LNG, which is developing a small LNG export and bunkering project in Jacksonville, Florida.

Ferus owns a small merchant LNG plant in Elmworth, western Alberta, which has capacity of 50,000 USG/d, equivalent to 4.2mn cf/d of gas. It has applied to Alberta regulators for authorization to build another LNG production facility, with initial capacity of 100,000 USG/d, near Villeneuve, just outside of Edmonton.