The Perth-based industrial conglomerate said following several years of trials, LNG has now been proved as a viable alternative fuel to diesel.

Wesfarmers said the 175-tonne-per-day production plant would significantly expand the availability of LNG as a fuel for the heavy-duty vehicle (HDV), industrial gas and remote power generation markets.

“This project is the result of considerable time and innovation applied over several years to prove the commercialisation of LNG through the operation of up to 70 trucks running on LNG and collectively traveling over 12 million kilometres throughout Australia,” said Wesfarmers Energy managing director Tim Bult.

“It has involved establishment of a pilot plant, commercial customer trials with equipment manufacturers applying LNG as a diesel substitute and ensuring the HDV engine technology was adapted to suit Australian standards.”

Construction of the plant is expected to begin in November 2006, with commissioning scheduled for the end of the first quarter of 2008.

Bult said contracts have already been signed for a large proportion of the plant's future LNG production and there was potential to undertake similar projects elsewhere in Australia.

Wesfarmers has also successfully concluded long-term gas supply and pipeline access arrangements with Santos and Dampier-Bunbury Pipeline respectively.

Under the contract Santos will supply up to 37 petajoules of gas to the plant for its first 10 years of operations. The gas will be supplied from the offshore John Brookes gas field with first gas delivery planned for early 2008.

The John Brookes gas field was discovered in 1998. The platform is in 47m of water within licence WA-29-L, in the Carnarvon Basin, 120km offshore in Western Australia.

Interests in John Brookes and WA-29-L are: Apache Northwest Pty Ltd (operator) 55% and Santos (BOL) Pty Ltd 45%.