The surge in the discovery of giant deepwater and remote gas fields around the world is driving the selection of floating LNG (FLNG) solutions as the prime development choice for these reserves.
With finds being made on a regular basis in areas such as offshore East Africa, Western Australia, and Israel, FLNG terminals have been elevated to become the industry’s favored solution, eliminating the need for expensive long-distance pipelines from the field to an onshore terminal with their onboard storage and regasification facilities for transporting the LNG via shuttle tankers. The ability to potentially redeploy a terminal from one exhausted field to a fresh reserve also is a significant factor in their long-term planning.
Multibillion dollar decisions being made by majors like Shell to develop fields like the operator’s Prelude project offshore Western Australia have injected greater confidence within the industry that this technology – until recently considered conceptual – is now very much a new piece of kit in the E&P business’ offshore toolbox.
Cost, environmental advantages
This is reflected in market forecasts, with analyst Douglas-Westwood saying in its latest FLNG report that global capital expenditure will be nearly US $29 billion between 2012 and 2018. The relative cost advantages over onshore terminals plus the short lead times are proving to be a substantial incentive for developers, the analyst said.
According to a recent technical paper by Kanfa Aragon, FLNG also has a strong environmental argument in its favor, avoiding the need to flare in the case of associated gas, for example. As environmental regulation gets stricter, the presence of oil-associated gas in remote locations is a challenge economically. At present around 110 Bcm of natural gas is flared annually worldwide. Producing some or all of this gas in the form of exported LNG adds potentially significant economic value to existing projects and reduces emissions.
There is a misconception that FLNG is for remote and deepwater locations only. It is worth pointing out in these days of a booming shale gas market that LNG FPSOs can be located near to shore to process surplus supplies from existing onshore pipeline grids or for remote onshore fields where infrastructure for plant construction is limited (with the LNG FPSO hooked up to a jetty to receive the gas feed from land).
Floating liquefaction offers a fast-track process compared to its onshore equivalent. Current LNG FPSO projects show that the planned development time from project definition until first LNG is up to 50% less than that required for a traditional onshore LNG development, according to Kanfa Aragon, which has its own patented expansion technology for offshore LNG called the Optimized Expander Cycle.
Project queue growing
The list of projects either under way or nearing approval is growing longer by the day. Along with Prelude there is also Noble Energy’s 8.4 Tcf Tamar FLNG project offshore Israel (as well as the likely FLNG development of its nearby 16 Tcf Leviathan field); Interoil’s Gulf LNG plan in the Gulf of Papua; Petronas’ PFLNG 1 project to develop the Kanowit field offshore Sarawak, Malaysia, by 2015 (to be followed by a second likely FLNG project between Petronas and Murphy Oil for the 2 Tcf Rotan,
Bulah, and Bunga Lili discoveries); Australia’s Sunrise FLNG terminal; INPEX’s Abadi FLNG project in the Arafura Sea offshore Indonesia; and GDF Suez’s Bonaparte FLNG project in the Timor Sea. All of these are expected to be in operation within the next three to six years.
There are pre-FEED studies under way on at least five potential FLNG schemes at this time.
In response to the global market and the smaller “mid markets” emerging around the world, particularly in the Asia Pacific region, two distinct production capacity bands already have become evident in the consideration of this first generation of LNG FPSOs.
According to Joe Verghese of WorleyParsons in a paper at this year’s Offshore Technology Conference, Shell and Petrobras are evaluating the potential application of LNG FPSOs for capacities of 3 MMtpa+, which are close to baseload plant train capacities and consistent with the exploitation of gas reserves of 4 Tcf to 5 Tcf or more (such as on Prelude). In contrast, he said, companies such as Flex LNG and H?egh LNG are offering capacities in the 2 MMtpa and sub-2 MMtpa capacity domain, targeted at exploiting gas reserves in the 0.5 Tcf to 3 Tcf range (more typical of mid-tier stranded gas reserves).
Technology challenges remain
Even with so much activity, many challenges still remain for floating liquefaction terminals in what is still very much an emerging technology area. By their very nature offshore facilities must be more compact and have a lower weight to fit on limited deck space as well as offering a high inherent process safety. Other constraints include vessel motion, the need for modularization, and maintenance. But the overall opinion appears to be that there are no “showstoppers” from a technology standpoint. Verghese does, however, go on to discuss some of the technology risks associated with FLNG projects. A critical feature of an FPSO-based LNG scheme is the offloading of the cargo from the floater’s storage tanks to a tanker, due to both the independent and coupled motion characteristics of the two vessels moored in close proximity. Several factors impinge on the choice of technology for this operation, he said:
- Maintenance of minimum safety separation required for the two vessels to avoid collision;
- The integrity of the LNG transfer using loading arms or cryogenic hoses;
- The reliability of the overall system of mooring and fluid transfer to ensure impact of downtime in such operations is minimized;
- Cost and mechanical/structural complexity;
- Technology qualification status; and
- Extent of modifications required to trade carriers.
Depending on the sea state prevalent where the FPSO is deployed, two alternative mooring positions can be applied: side-by-side or tandem. The first solution replicates the arrangement seen at shore terminals and is applied in benign or semi-benign metaocean environments. The tandem offloading arrangement is considered more appropriate for severe sea states, but tandem, ship-to-ship LNG offloading has not yet been performed. However, said Verghese, several technologies are at an advanced stage of development. Developments in offloading technology have followed two distinct paths:
- Adaptation of the LNG offloading loading arm concepts, widely proven in the context of shore-side offloading; and
- Development of the cryogenic loading hose, either in an aerial configuration or a free-floating configuration.
In general, Verghese continued, the motion characteristics generated by two vessels in a coupled configuration require complex analysis to ensure the integrity of fluid transfer using loading arms. The development of the cryogenic hose concept has made progress, with advanced testing of the hose currently in progress with several technology developers. The medium-term goal is to achieve the deployment of a floating cryogenic hose concept. This will materially simplify the offloading concept, he said, and minimize the motion interaction between the vessels. This development has to be viewed in the context of a multiyear development horizon to reach market-ready status.
As the industry progresses toward the day when its first FLNG project begins operations in 2015 or 2016, this novel area of the offshore production business is set to gain increasing momentum, driven by its favorable economics and continuing long-term forecasts for global LNG demand growth.
Editor’s Note: Excerpts in this article have been taken from OTC papers 23669, 22850, and 23527.
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