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
Record RFS mandates strain biofuel supplies
The EPA’s recently finalized Renewable Volume Obligations (RVOs) for 2026–2027 raise Renewable Fuel Standard (RFS) mandates to record levels, marking a step-change in required blending volumes. This shift increases demand across the system and leaves less buffer between required volumes and available supply, tightening overall market conditions. Key dynamics shaping supply requirements: These dynamics suggest […]
Oil & gas midstream: 2026 mid-year trends and supply chain impacts
The midstream sector in the first half of 2026 is moving at a breakneck pace, driven by a strategic pivot toward “wellhead-to-water” natural gas liquid (NGL) integration, severe high-horsepower compression supply-chain constraints, and a massive power-generation super-cycle spurred by AI data center expansion. Rather than relying on speculative mega-projects, major pipeline operators are maximizing fee-based […]
2026 June SAF Tracker highlights – #87
Here are the latest highlights from ADI’s SAF Tracker: The full newsletter along with archives and databases are available to SAF Tracker subscribers.