Jan 2014 - Sub161 signs Gas Sales Agreement with Fortescue Metals Group

Sub 161 Pty Ltd, an Australian owned virtual pipeline company, has signed a foundation gas supply agreement with FMG Solomon Pty Ltd (Fortescue Metals Group) to supply 11 terra joules (TJ) of natural gas per day to the company’s Solomon Hub.  Sub 161 co-founder and Chairman Nathan Mitchell said, “I am looking forward to the opportunity to develop, what is one of largest Compressed Natural Gas (CNG) virtual pipelines in the world. The project, in its initial phase will replace up to 300,000 litres of diesel per day with natural gas.

Sub161 is proud to be at the forefront of virtual pipeline solutions in Australia, providing industrial power users an alternative to burning expensive and environmentally unfriendly diesel fuels.  The company sees strong value in the relationship with FMG, who are pioneering energy diversification in remote regions of the Pilbara. FMG has multiple large diesel replacement opportunities across its operations in the Pilbara, which stand to provide further significant fuel savings to the company.

The project, which commenced in early December 2013, will see first CNG deliveries in the middle of 2014. The company has engaged a world leader in CNG applications delivery, to undertake the Engineering Procurement and Construction of the two site facilities. The Sub 161 solution is a modular facility that affords dynamic supply combinations to multiple locations. Gas supplied by Sub161 will provide material cost savings to FMG’s fuel requirement to power the Solomon Power Station, owned and operated by TransAlta Corporation. 

The FMG contract with Sub 161 is for an initial 12 month period leading up to the completion of the Fortescue River Pipeline, as announced to the market by FMG and Duet on 16th January 2014. Sub161 believes the large 16’ diameter Fortescue River Pipeline, may have an initial capacity in excess of 60TJ/Day, which provides a potential means for supplying other users within the East Pilbara.

Sub 161 has successfully procured its upstream gas supply and gas transport to support and fulfil its delivery obligations to FMG. FMG is clearly focused on delivering reductions in operating costs at its multiple operations and together we are targeting diesel reduction within FMG`s current diesel demand of approximately 800 million litres per annum.

Sub 161 provides both CNG and LNG virtual pipeline solutions to its customers who do not currently have access to traditional fixed pipeline infrastructure. The solution has been extremely well received by the mining industry, who welcomes the cleaner, cheaper alternative to remote base-load power generation.

Sub 161 is advised by Morgans and Bizzell Capital Partners.

Sub 161 Contact Angus Karoll (CEO)  0432 163 929

Morgans contact Rob Douglas 0403 281 470
Bizzell Capital Partners Contact   0437 725 443