(EnergyAsia, August 29 2011, Monday) — Companies have found that not all of their recent offshore natural gas discoveries can be commercially developed as they require high capital expenditure (capex) for the required infrastructure to produce and transport the gas to shore. In most cases, natural gas from such areas is either flared off or re-injected into reservoirs.
To monetise such reserves, some companies have started to develop floating liquefaction technologies to enable the offshore vaporisation of natural gas, according to a new study by UK-based consulting firm GlobalData.
Such FLNG production facilities reduce the per ton capex of floating liquefaction compared to higher cost land-based terminals. Companies save cost by eliminating the need for land-based facilities and expensive under-sea pipelines which are needed to support onshore LNG production terminals.
According to the study, “Floating LNG Terminals – Technological Innovation and Low Cost Monetisation of Offshore Gas Reserves Will Play a Key Role in Global LNG Industry Growth”, FLNG projects also reduce the carbon footprint associated with onshore production terminals.
As a result of such advantages, the study said FLNG projects in Papua New Guinea and Nigeria are expected to start operations by 2015.
Major oil and gas companies have begun to explore the opportunities presented by FLNG projects. Flex LNG, Hoegh LNG, Samsung, Daewoo, Mitsubishi and Peak Petroleum Industries are participating in FLNG projects in prolific offshore areas over the next four years. These are small scale projects, with a production capacity ranging between 1.5 and three million tonnes per year.
Interoil’s PNG FLNG and Progress Floating LNG are among several such projects expected to start up during 2014–2015.
Royal Dutch Shell’s Prelude Floating LNG is a US$198-billion project in the Browse Basin off northwestern Australia with a production capacity of 3.6 million tonnes per year due to start up by 2016. Shell has placed an order for 10 floating vessels with South Korea’s Samsung Heavy Industries, with an agreement for another 15 in the future.
GlobalData said it expects the total liquefaction capacity of FLNG projects to reach 6.7 million tonnes by 2015, giving these terminals a major role in the global regasification market.
The study expects FLNG capacity in the global LNG regasification market to increase from 5.4% in 2010, to 9.7% in 2015. FLNG terminals are low cost, quick to build and offer greater mobility in comparison with onshore land based terminals.
GlobalData said that eight FLNG regasification terminals are now in operation in the US, Brazil, the UK, Kuwait and Argentina. During 2011–2015, it expects another 15 FLNG units to begin operations.