Floating LNG production - extending the technology envelope
Source: BIMOCO, written by Mike Corkhill
The commercial production of LNG on a floating vessel is edging nearer. The development will bring the LNG industry full circle, for the first ever LNG cargoes – several trans-Atlantic trial shipments to the UK in 1959 – were produced on a floating barge stationed in the Louisiana bayous near Lake Charles.
Which of the three floating LNG production (FLNG) vessels ordered to date will be the first to enter service is a moot point. Shell ordered the first LNG “floater” in May 2011. This vessel, which is being built in Korea for the Prelude project off Australia’s northwestern coast, is so large and is embracing so many ground-breaking technologies that it will not be ready to enter into service until early 2017.
A project more moderate in scale is the FLNG vessel that Petronas made the commitment to build in Korea in early 2012. The PFLNG 1 scheme calls for the vessel to be positioned in shallow water about 180 km off the coast of Bintulu in the Malaysian state of Sarawak, to liquefy gas from the Kanowit field.
In contrast to the Prelude floater, which will be 488 metres in length, 74 metres in breadth and have the capacity to produce 3.6 million tonnes per annum (mta) of LNG, the PFLNG 1 vessel will be 300 m long, 60 m wide and have a 1.2 mta liquefaction capacity. The Malaysian unit is scheduled to commence LNG production in late 2015.
The smallest of the three projects under construction is that being developed by Pacific Rubiales for positioning at Tolú on Colombia’s Caribbean coast. The non-propelled vessel, termed a floating liquefaction regasification and storage unit (FLRSU), was ordered in China in June 2012 and could be providing LNG, initially for the spot market, as soon as late 2014. Pacific Rubiales intends to eventually make FLRSU cargoes available to power stations in the Caribbean region, once the required LNG receiving infrastructure is in place.
The small liquefaction barge will be able to produce up to 0.5 mta of LNG. Its regasification capability will enable a reversal of cargo flows. In this way, Colombia will be in a position to import gas on those occasions when droughts cause a reduction in output from the country’s hydroelectric plants.
The three FLNG projects that have been sanctioned represent the tip of an iceberg whose presence is growing by the day. Petronas is poised to make a final investment decision on its PFLNG 2 scheme, a 1.5 mta FLNG project aimed at monetising the gas resources of the Sabah field. This deepwater deposit is also located off the coast of Sarawak and the proposed timetable calls for the first LNG cargoes to commence loading by late 2016.
Another country whose FLNG aspirations are beginning to materialise is Israel. Large deposits of gas have recently been discovered in Mediterranean coastal waters, enough to supply both the domestic and export markets. Gazprom has recently signed up to purchase the output from a 3 mta FLNG vessel that would be built in Korea and stationed over the Tamar field, off the coast near Haifa. The sale and purchase contract calls for shipments to commence in 2017 and extend over a period of 20 years.
The discovery of large volumes of shale gas in the US in recent years has raised the prospect of that country emerging as one of the leading exporters of LNG over the next decade. One US LNG export project is under construction, a second has just been sanctioned and 20 additional schemes are at various stages of the permitting process.
Three of the 20-plus US LNG export terminals currently engaged in the review process are based on the use of FLNG vessels. Excelerate Energy is promoting a plan that encompasses the positioning of a 4.4 mta FLNG vessel at a purpose-built jetty in Lavaca Bay on the Texas Gulf Coast. A recently completed front-end engineering and design (FEED) study has verified the commercial and technical viability of the scheme which, subject to the necessary approvals and sales agreements, could be operational in early 2018. The master-plan includes an option for a second, adjacent FLNG vessel.
Cambridge Energy is seeking to develop a similar facility on the Mississippi River in Louisiana’s Plaquemines Parish. Should all go according to plan, two 4 mta FLNG vessels will go into service at the site in February 2018.
The third planned US floater project is an ambitious undertaking being mounted by Main Pass Energy Hub. The initiative calls for a series of FLNG vessels to be stationed at an existing network of offshore structures 30 km off the Louisiana coast. This facility has already been designated as a deepwater port. Main Pass has requested permission for the export of up to 24 mta of LNG and has set 2018 as the target start-up date.
Notwithstanding the scale of the proposed US FLNG projects and the difficulties that the Malaysian and Israeli floaters will no doubt have to overcome, the Prelude scheme in Australia faces the greatest technological challenges due to the exposed location in which it will operate.
Prelude will be moored using the world’s largest turret yoke arrangement 200 km from the nearest land off Australia northwest coast, an area prone to seasonal cyclones. The Prelude FLNG vessel is being designed for not only an uninterrupted service life of 20 years at this location but also a further 20 years at another offshore gas field that will need to be developed in future.
Prelude will set new standards in floating liquefaction, LNG storage and cargo transfer operations. Cargo transfers, in the side-by-side mode using special loading arms, will present particular challenges due to the large disparity in height between the FLNG and shuttle tanker manifolds. Prelude will also produce 1.3 mta of condensate and 0.4 mta of LPG that will need to be stored and offloaded.
At USD 12 billion, Prelude will not be a cheap project. The FLNG newbuilding itself will cost over USD 3 billion. However, cost overruns of 20-30% in the construction of the six land-based liquefaction plants now underway in Australia have only enhanced the economics of the floating option.
The latest Australian project in line for a final investment decision (FID) is the Browse scheme, also in the northwestern part of the country. This past April the joint venture partners in the USD 40 billion Browse initiative decided to shelve their original plan for a land-based liquefaction plan, citing the escalating cost of developing LNG projects in Australia. Alternative methods of realising a successful outcome for the project, including FLNG, are now being investigated by the Browse participants.
Shell, the driver of the Prelude venture, is also involved in several other FLNG plans, including the Inpex-led Abadi project in Indonesia, Woodside Petroleum’s Sunrise project in the Timor Sea and its own Crux field, also located off Australia’s northwestern coast.
The most notable recent endorsement of floating LNG production has come from another energy major. ExxonMobil is weighing up the FLNG option for its Scarborough field, one of the many gas-rich deposits off Australia’s northwestern shores. If such a development method is chosen, Scarborough would be the most challenging FLNG scheme yet.
The Scarborough gas, which is very dry gas, is located 290 km offshore where the water depth is 1,000 metres. The field is also shallow and wide and, as such, will require a substantial amount of expensive, horizontal deepwater drilling. The ExxonMobil plan being submitted to the Australian authorities calls for an FLNG vessel that would be even larger than Prelude and able to produce 6-7 mta of LNG from five trains.
If the Scarborough scheme is realised and the anticipated start-up date of late 2020 is achieved, ExxonMobil will be setting the new FLNG benchmarks going into the new decade.
It will be interesting to see how much LNG is being produced on floating vessels by that date. The various projects outlined above could well be augmented by an initiative that comes to be known as Australia’s second FLNG facility. Yet another scheme proposed for the offshore waters of northern Australia, Bonaparte LNG has already received government approval and is only awaiting an FID by project partners GDF Suez and Santos to proceed.
