The performance of the world’s first floating LNG projects, which are moving from execute to operate, will form the shape of the industry to come. Elaine Maslin reports (First published in the December 2017 OE, access the full issue here).
Sitting some 475km (295mi) north-northeast of Broome, the 488m-long vessel (one of the largest floating offshore facilities in the world) will join Petronas’ 365m-long PFLNG Satu, which beat Shell to the first FLNG production, offshore Malaysia, late last year as the world’s only FLNG projects operating globally.
Image: Right, Transberder's FLNG solution.
Their performance, and that of smaller scale facilities like that of Cameroon FLNG (due onstream next year along with Prelude), will help or hinder the potential for future FLNG roll-out, says Matt Day, global gas and LNG analyst at Wood Mackenzie.
“We’re in the execute and commissioning phase,” Day says. “The market is looking at these projects and waiting to see if they deliver and if they can be reliable. The success of these projects will dictate what we see in the next few years.”
There are plenty of possible projects waiting in the wings, including the recently sanctioned Eni Coral FLNG project offshore Mozambique and Ophir Energy’s Fortuna development, for which the firm is seeking finance. In all, there are 24 FLNG proposals totaling 156.9 MTPA, as of January 2017, according to the International Gas Union’s World LNG Report.
The attraction of FLNG is lower cost facilities (than onshore facilities) and flexibility to divert them to other markets. FLNG projects can be based on several development concepts – purpose-built, near-shore barge, and conversions. They generally aim to commercialize otherwise stranded gas resources, avoid much of the lengthy permitting and regulatory approvals associated with onshore proposals, and reduce costs with offsite construction, says the World LNG Report.
Six FLNG projects have been sanctioned in the last few years; Prelude, Petronas PFLNG (x2), Coral FLNG, and Golar Cameroon, plus Exmar LNG, which was canceled. These fall into two categories, Day says; large-scale, open sea projects, like Prelude and PFLNG, then nearshore, benign sea, small scale projects.
SBM Offshore's TwinHull concept.
“The large-scale projects demand heavy weights like Shell and Petronas, well capitalized companies looking to develop projects with a view to expanding their expertise in the LNG space," Day says. "I think that is what Eni is also doing with Coral, developing the technology to use it elsewhere. The small projects are led by partnerships between upstream companies and LNG technology providers, like Golar.”
Even between the large-scale projects, there are significant differences. A November 2016 report on floating LNG by Oxford Economics points out that Prelude uses dual mixed refrigerant (DMR) technology and will produce 3.6 MTPA on a 488m-long vessel, i,e, 1.1 MTPA/ha. The Kanowit (PFLNG Satu) project uses nitrogen and produces 1.2 MTPA on a 365m-long vessel, i.e. 0.5 MTPA/ha. Different refrigerant options usually lead to different outcomes. While Kanowit’s choice in nitrogen isn’t flammable like the DMR on Prelude, and it has a smaller flare, it requires more space onboard, the Oxford Economics report found.
Go back some years and it was a much different scene for FLNG. “When Prelude and PFLNG were sanctioned, 5-7 years ago, prices were high, companies were in good shape and there were buyers for projects. As soon as the price crashed in 2014, it tied up the LNG market and LNG projects in general became difficult to move forward,” Day says. In the past two years 12 MTPA was sanctioned, across five projects, compared with 30 MTPA in 2013 and 2014, he adds. “FLNG projects in particular were challenged because of the perceived risk associated with them, being new technology, not yet tried and tested.”
Shell had seen Prelude as a “design one, build many” concept, with Browse, using three FLNG units, as its next step. Yet, this is now off the agenda for Shell, Day says, due to high costs, the collapse of prices, and lack of buyers. Meanwhile Golar, a shipping provider, is also looking at a “design one, build multiple” ethos. “They are working on Cameroon and want to replicate that with Fortuna,” Day says.
From 2017-2018, we will see the delivery of three FLNG vessels. Petronas has already started production from PFLNG Satu, albeit with a pretty slow start, Day says. Prelude is on location, with start-up expected in 2H 2018, and the Cameroon FLNG vessel close to arriving in country.
“If Golar can deliver, it will bring much more projects for them,” Day says. “They need to deliver before they get more upstream resource holders subscribing to that. But, we still see FLNG as a niche technology for niche situations. When you look at the broader LNG market, there are big projects moving forward in Qatar, Russia and the US, with 5-15 MTPA [each].” In comparison, Prelude, the biggest FLNG project, is 3.6 MTPA. “That’s not to say it cannot work and cannot be competitive if the conditions are right, with the right partners and contracts,” Day adds.
Caribbean FLNG, seeking a new home.
Whether the rest will come to fruition or not, the supply chain is taking note. A string of companies has set out partnerships and collaboration agreements (KBR, Wison Offshore & Marine, Add Energy, Transborders, GTT) while others have been beefing up their LNG capabilities (Aker Solutions).
Small scale options
Add Energy has partnered with Transborders Energy, and joined forces with TechnipFMC and Modec, to create a unique, fast-track business model that it says would free up small-scale stranded offshore gas deposits around the world.
Add Energy says there’s an oversupply of gas currently, but that it will turn into a shortage by 2020, because of demand growth globally, but specifically in Asia. “If we are to meet the future demand for gas, we will need quicker extraction models than the current long-term projects allow. We are targeting to be placed ourselves at the time LNG supply cannot cope with global demand (2024),” says Eduardo Robaina, vice president, well engineering, Add Energy.
Add Energy and its partners have set out a concept for a small scale FLNG unit (carrying up to 1 MTPA) to extract gas from proven small fields containing 0.5-2 Tcf of gas. In a reversal of the usual development process, which sees facilities designed for a specific field, the idea is to develop a unit to fit a range of fields, then look for fields that will be suitable, shaving off some five years engineering work, the group says.
“These fields have little value at the moment because accessing the gas is either cost prohibitive or it is not economically viable to use the more common large scale and expensive FLNG vessels on them,” says the consortium. “It’s about using fields that fit the pre-existing plan, not finding a field and creating a plan to suit it.
“Key to the model is the deployment of an innovative mini-FLNG vessel. Rather than investing up to five years in identifying a gas resource, understanding its size and potential and creating a bespoke development concept, the new model establishes a pre-defined process incorporating the use of the mini FLNG vessel and applies it to proven, fit for purpose fields.”
Production would be from a small number of wells (2-3), targeting “the sweet spot” and keeping the cost a low as possible. “Our basis of design looks for water depth between 100-400m and permanent mooring has been selected,” Robaina says. The companies are still considering newbuild versus conversion for the hull.
“We are working towards proven technology and as part of our resource selection criteria we want to remain in shallow waters, up to 2 Tcf of gas in place, normalized pressure,” Robaina says. “We want to focus in the development of mini-FLNG topsides technology and ‘where possible’ avoid the need for additional processing topside modules.”
The first field to be targeted will be offshore Australia. The field will be confirmed early 2018 and production of gas is expected to start in 2020, Robaina says. After this, the model will be available globally, he adds.
“Our initial concept is to be deployed within Australia waters, given our proximity to end users (Asia market), political stability within the regions and our strong operational knowledge in the area. The sweet spot is driven by the resource/reservoir and not by an area/region in specific. Western and northwestern Australia, are known for their active cyclonic activities, so we will be taking harsh sea/ storms condition as part of our design concept. ”
SBM Offshore launched its FLNG solution, TwinHull LNG, for stranded gas fields in 2015. SBM has offered a midscale FLNG unit (1.5-2 MTPA) conversion, suitable for what it says are some 700-plus stranded gas fields between 0.5-2 Tcf. SBM Offshore suggests converting LNG tankers into FLNG facilities – in much the same way as has been done for FPSOs.
“The advantage of this concept includes lower costs and a shorter schedule,” SBM says. Process facilities, storage and crew living quarters would be on deck. The layout would be achieved by joining together two LNG tankers in a ‘twin hull’ concept, to allow adequate space for the process facilities and sufficient LNG storage capacity. SBM has performed generic pre-FEED work, together with LNG experienced engineering firm Linde Engineering, to cater for a wide range of potential reservoir compositions and environmental conditions, which can then be optimized for specific fields. It would use a pre-cooled dual nitrogen expansion process without natural gas liquid (NGL) recovery.
SBM also has a newbuild LNG FPSO concept, targeted towards small to mid-scale fields (1-2.5 MTPA) with a storage capacity up to 241,000cu m. It is suitable for at shore, nearshore and offshore applications, the firm says.