ADI evaluated the commercial viability of replacing heavy oil with LNG for industrial steam production in isolated mining and oil and gas operations. The study established the crude oil price thresholds required for fuel-switching profitability and analyzed the global cost of delivering LNG from multiple supply hubs. Technical assessments included evaluating the potential for carbon credits to further enhance the economics of replacing carbon-intensive heavy fuels.
The client
Independent exploration and production company
The situation
Exposure to high operational fuel costs and reliance on heavy oil production for onsite power and steam generation.
ADI’s contributions
Delivered cost modeling
ADI compared ex-ship costs from Qatar, Australia, and the U.S. to determine the most competitive source for the client’s location.
Fuel-switching sensitivity analysis
Quantification of the oil price threshold provided clear decision support for long-term fuel contracting.
Contract structuring support
Identification of negotiation levers, including price reopeners and spot-market backup commitments, reduced procurement risk.
Supply route analysis
Evaluation of primary and secondary global LNG trade routes identified the most reliable logistical paths for remote delivery.
Key outcomes
- Validation of a fixed-price LNG sourcing strategy to lock in operational savings and mitigate future oil price volatility.
More insights
Newsletter: Data center power, ammonia, and biofuel mandates
In the June 2026 edition, AI-driven demand is surging, but constraints in grid capacity, permitting, and equipment supply are reshaping how and where data centers expand. Developers are increasingly embedding power considerations into site selection, shifting toward distributed infrastructure models and prioritizing regions with faster, more reliable access to electricity. As power availability becomes a […]
The growing challenge of industrial R&D
For much of the 20th century, R&D was viewed as a long-term investment in scientific discovery, often insulated from day-to-day operational pressures. Success was measured in patents, breakthrough technologies, and the promise of future growth. Today, that view no longer holds. Across energy, chemicals, and broader industrial sectors, R&D has been reshaped by a combination […]
IMO’s safety guidelines pave the way for ammonia-fueled ships
Ammonia has increasingly emerged as a potential low-carbon marine fuel to support decarbonization in the maritime sector due to its carbon-free combustion profile. However, compared to methanol, ammonia has lagged behind in commercial adoption as a low-carbon marine fuel. This is primarily due to its toxicity, which requires more complex storage and handling systems, as […]