ExxonMobil, Woodside, Statoil ready to board on FLNG
Earlier this month, ExxonMobil and its partner BHP Billiton (BHP) unveiled their project to introduce their first floating liquefied natural gas (FLNG) vessel as the remedy to stop the costs inflation of its Scarborough natural project offshore Australia.
A week later, the Australian company Woodside Petroleum (Woodside) announced to stop its $50 billion onshore Dampier Peninsula LNG plant to investigate alternative solutions such as FLNG to develop Browse gas field.
Although very different, these projects have in common to face spiraling costs due to the accumulation of challenges to integrate them in sensitive or harsh environment far from any local infrastructures.
In these projects the distance from shore between 300 and 550 kilometers and the deep water constraints convert the pipelines solutions in nightmare and source of tension between the partners.
In addition the onshore LNG plants require the local acceptance and heavy ground accommodation work.
In this context, the FLNG appears as a marvelous solution even if it brings its own challenges that nobody so far has experienced.
ExxonMobil and BHP opte for Scarborough FLNG
Discovered in 1979, Scarborough is estimated to hold 10 trillion cubic feet (tcf) of natural gas.
Compared with Petronas and Shell FLNGs currently in construction, Scarborough FLNG should require from ExxonMobil and BHP less capital expenditure per million t/y capacity as these costs are not proportional to the production capacity.
The first vessels to support LNG processes were over sized compared with their production capacity as to be the benchmark for further developments.
Therefore Scarborough FLNG should not exceed $15 billion capital expenditure.
Through their 50/50 joint venture, ExxonMobil and BHP organized a competitive front end engineering and design (FEED) in order to make the final investment decision (FID) in following in 2014 and see their Scarborough FLNG in operation by 2020.
Woodside and Shell assess Browse FLNG solution
For Woodside, the option to consider the FLNG technology to develop Browse might be easier as it partners with Shell, holding 27% shares in the project, which appears today as the technology leader of this solution and which will have already Prelude FLNG running in the area.
Currently, Woodside is implementing the substitutes scenarios to replace the conventional scheme based on the onshore James Price Point that has been stopped when the costs for the development of Browse LNG were estimated to $50 billion capital expenditure.
Statoil proposes Gazprom Shtokman FLNG project
Located 550 kilometers from shore in the Barents Sea, the Arctic conditions and some strategic choices inflated the costs of the Shtokman project from initial $15 billion to more than the double.
Introducing a FLNG in such arctic region is a challenge in respect with all the risks associated to the ice accumulating on the decks and the threats of the icebergs.
But those risks were assessed during the FEED of Shtokman and solutions had been developed for the offshore units regardless if it should have been a floating production unit (FPO) or a conventional offshore platform.
While Petronas and Shell are leading the FLNG revolution with the support of engineering companies like Technip, Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering (DSME), the recent decisions made by ExxonMobil, Woodside and Statoil to consider FLNG to unlock costs-stalled projects are sending the signal to the oil and gas community that the FLNG technology is becoming a reality that shall count in all offshore gas field development projects from now.