SYDNEY, AUSTRALIA: Carnarvon Petroleum Limited has formed a joint venture with Frontier Impact Group (FIG) to produce renewable diesel.

Frontier Impact Group (FIG) has been actively progressing a bio refinery business in Western Australia to produce renewable diesel and other highly valuable products.

The joint venture plans to use internationally proven technology to process waste lignocellulosic biomass as a feedstock and producer renewable diesel, high-quality biochar and wood vinegar.

The local implementation of this technology will be an Australian first. Much of the high-quality biochar could be processed further into high-quality graphene. Graphene has many next-generation applications such as electronics, batteries and material composites.

Each party will own 50 per cent equity in the joint venture, with Carnarvon set to invest A$2.6 million in seed capital to enable the first project to reach financial close, which is expected by early 2022.

One of the attractions of the venture to Carnarvon is the effective enhancement of the Company’s exposure to oil price linked production from renewable diesel. First production from the facility is targeted for late 2022, which would occur ahead of a successful Buffalo field redevelopment scheduled for late 2023 and first production from Dorado scheduled for late 2025.

Another attraction of the venture is its real potential to lower Carnarvon’s emissions intensity on a portfolio basis, particularly as the projects are scaled up in the future. The joint venture intends to pursue the accreditation of Australian Carbon Credit Units (ACCUs) for the production of renewable diesel and other associated activities.

The venture is also looking to be involved in a number of carbon project development activities such as tree planting that will enable Carnarvonto generate ACCUs to offset carbon emissions produced from Buffalo and Dorado and place the Company firmly on the path to achieving its net-zero before 2050 target.

If the returns profile of the venture is in line with that being modelled, there are pathways to scale up and create a sizeable business venture over time that has a number of avenues for realising value for Carnarvon shareholders.

In the near term, Carnarvon will continue to focus on its core upstream oil and gas business. The core business offers attractive low cost production potential and exposure to strengthening oil prices.

The biorefinery business is not expected to draw on Carnarvon’s Buffalo and Dorado focused resources or detract from exploring the potential of the vast Bed out basin. But the venture is expected to be favourably received by lenders supporting these core projects.

Carnarvon Managing Director and CEO, Mr Adrian Cook, said: “This opportunity underpins our core business endeavours, most particularly around funding Dorado, whilst enhancing our portfolio exposure to oil price linked products and for the future, building a value focused position in the renewables sector of the energy industry.

“Earlier today, we announced the Company’s commitment to delivering a net-zero carbon emissions business before 2050.

“This joint venture demonstrates a clear and pragmatic start to delivering on our net-zero commitment, while ensuring long-term, sustainable shareholder value remains a key determinant in our decision making.

“The opportunity also gives us the ability to substantially scale up our operations and provide avenues to add value through our existing knowledge and experience.

“Carnarvon holds equity in the world-class Dorado field that recently entered the formal development engineering and design phase. We are also preparing to drill two exciting exploration prospects near Dorado and, as the operator, drill the Buffalo-10 well with the view to redeveloping the Buffalo field. Our focus on these first-rate projects has not diminished in any way.

“We believe this opportunity makes strong business sense for Carnarvon. There is a clear link between the delivery of our core projects, securing carbon offsets for these through this venture and producing valuable products such as renewable diesel.”

Carnarvon Petroleum Limited

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6 Jul, 3:17 pm GMT+10 ·Disclaimer