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Conventional scheme for CNOOC South China Sea Lingshui project

CNOOC opts for Lingshui FPSO and export pipeline

Project Smart Explorer LogoThe state-owned China National Offshore Oil Corporation (CNOOC) is opting for a conventional scheme to develop the offshore gas field Lingshui 17-2, one of its largest discovery in the deepwater of the South China Sea.

Located 150 kilometers south of the Hainan Island, the Lingshui 17-2 gas field lies by more than 1,500 meters water depth in the Qiongdongnan Basin.

After three years intensive exploration CNOOC has declared the Lingshui 17-2 gas field to hold a minimum of 100 billion cubic meter proven reserves of natural gas.

In parallel to this exploration phase, CNOOC has been exploring the different concepts that could be used to developed the Lingshui 17-2 project.

CNOOC_Lingshui_17-2_FPSO-&-FLSRU_Project_MapBecause of the water depth and distance from the nearest shore at the Hainan Island, CNOOC has considered a:

Conventional scheme combining a floating, production, storage and offloading (FPSO) vessel with an export pipeline to shore

 – Floating liquefied natural gas (FLNG) vessel

 – Tension-Leg platform (TLP) with export pipeline

 – SPAR platform with export pipeline

 – Semi-submersible platform with export pipeline

Until end of 2014, the FLNG solution had the preference because of the deep water and the 150 kilometers distance from shore.

The FLNG concept is saving the construction of an onshore liquefied natural gas (LNG) plant.

In addition it could has established the template for other FLNGs to develop the Qiongdongnan basin gas reserves in respect with the on going new discoveries.

A FLNG for Lingshui 17-2 was estimated to require CNOOC to invest $1.6 billion capital expenditure for a production of 1.2 million tonne per year (t/y).

CNOOC gauges FLSRU barge moored at Hainan Island

Unfortunately CNOOC and China have no experience in building and operating such FLNG rising questions in term of risks and added value for the country.

Meanwhile CNOOC announced a 35% cut in its capital expenditure for 2015, posting costs reduction on the top of its agenda.

In this context, CNOOC revised its priorities and concept evaluation, putting the FLNG aside and preferring a conventional scheme with a FPSO, an export pipeline and LNG facilities.

CNOOC_Lingshui_17-2_FPSO-&-FLSRU_Project1Anyway, the Linshui 17-2 gas field remains far from any LNG facilities, the nearest being located at the CNOOC Zuhai onshore terminal in the Guandong Province, near Hong Kong.

Through different sections an export pipeline from Lingshui 17-2 to Zuhai Terminal should reach 1,000 kilometers from which 80% should be offshore.

Therefore CNOOC is considering to moore a barge-based floating, liquefaction storage and regasification unit (FLSRU) near shore the Hainan Island.

For a liquefaction capacity of 1.2 million t/y, this FLSRU is budgeted at $300 million capital expenditure.

Such FLSRU should limit the export pipeline to 150 kilometers and would provide China with an 100% home made solution.

Assuming this conceptual design being validated on the first quarter 2015, CNOOC would move into the front end engineering and design (FEED) phase in 2016 for an engineering, procurement and construction (EPC) phase to follow on fast track for the first commercial production expected in 2019.

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