A new business concept for the floating liquefied natural gas (FLNG ) industry aimed at freeing up small-scale resources of gas around the world is being floated out by Add Energy, an international energy consultancy provider, Transborders Energy (TBE), TechnipFMC and MODEC.
The new business model targets discovered gas resources of ≈ 0.5 to 2.0 trillion cubic feet of gas that have little value to their current owners because they are either in remote locations where tieback is capital intensive, or lack an economically viable development concept.
As explained, the key to the model is the deployment of an innovative small-scale 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 concept incorporating the use of a ≈1.0 million ton per annum FLNG vessel and applies it to fields that fit the concept.
“This low-cost concept represents a radical change in gas field development and will unlock hundreds of the world’s previously uneconomic smaller natural gas plays,” AddEnergy said.
“The economies of scale pursued by mega projects have not eventuated. They are too capital intensive and risky in terms of resilience and flexibility for what is a commoditizing business,” TBE Managing Director Daein Cha commented.
“However, the deployment of our pre-determined, low cost small scale FLNG concept on already discovered but stranded resources with innovative financial and commercial structures delivered by a small but high caliber team establishes a new value proposition to the resource owners and LNG buyers.”
Offshore Australia has been identified as suitable for an initial pilot project, with a target resource to be confirmed early 2018 and the project to is expected to reach Final Investment Decision by 2020. TBE is also in discussion with resource owners of other jurisdictions to pursue global opportunities.
“LNG development is currently focused on fields with large scale volumes between 5 and 10 trillion cubic feet or more. However, a supply shortage in LNG is expected from mid 2020 due to demand growth and a failure to proceed with new mega project developments,” Eduardo Robaina, VP for Well Engineering, Add Energy, said.
“Large-scale LNG projects typically involve up to five years of front-end engineering and design work and a further six years for EPC activities, but new projects need to progress now to capture this upside.
“The Transborders’ concept enables the development of previously uneconomic resources at a much faster pace than that of mega projects and will help feed the growing demand for energy, initially in Asia and elsewhere.”
Under the project, Add Energy would be in charge of managing the drilling operations, maintenance, safety and risk mitigation activities of the projects and is the exclusive partner to engineer, procure, drill and operate the wells.