Floating LNG

How can offshore LNG projects compete more successfully against onshore LNG plants?

Firstly, looking at LNG import, FSRU vessels have already become a commodity with a high degree of standardisation and a cost efficiency.  This, along with speed of deployment, the ability to relocate and the option to lease vessels, has made them very competitive against greenfield LNG regassification terminals.  More than 30 FSRUs are now in operation, and a similar number under construction or proposed.

For LNG production on the other hand, FLNG vessels are struggling to gain wide acceptance. Although 3 are now in operation, and 4 more under construction, they are generally seen today as being too expensive and overly complex.  At least 14 other FLNG projects have been studied, before subsequently being cancelled and, in around half the cases, replaced with an onshore LNG project.  A further 30 FLNG prospects have been identified, but it remains unclear how many will actually make it through to project sanction.

A key factor in both onshore and offshore LNG processing is the choice of liquefaction technology.  For onshore, high efficiency is normally seen as a key requirement, to minimise the amount of feedstock consumed as fuel and so maximise yield.  Some clients have demanded the same level of efficiency for FLNG vessels, but this may not be the optimum choice.  Offshore, other factors that must be considered include vessel motion, available deck space, congestion, refrigerant storage, fire and explosion risk, maintenance of large machinery, as well as impact of complexity on project schedule and project risk.  In many cases a lower efficiency, simpler and cheaper topsides process plant can be the overall optimum FLNG solution.

FLNG has several key advantages over onshore LNG plants. 

• Firstly, the unit can be constructed in a controlled shipyard environment using well trained and cost-effective labour, instead of a greenfield site in what may be a hostile or high labour-cost location. 

• Secondly, FLNG can be relocated should there be a lack of feedstock gas – Petronas’ PFLNG1 is already being studied for relocation after only 2 years of production. 

• Thirdly, FLNG has the potential to be commoditised like FSRUs, since the hull and liquefaction elements at least have the potential to be highly standardised.

All three of these advantages are very similar to those offered by FPSOs for offshore oil and gas production, indicating opportunities for knowledge transfer.

There are also other important parallels between FLNG and FPSO projects.  For example, the price of two FPSOs with the same functional requirements can vary by a factor of up to 2, depending on the extent of prescriptive client specifications and standards imposed on the contractor.  This has created a strong market for FPSO leasing, using mainly contractor standards that are repeated from job to job, driving standardisation and cost efficiency.   The FLNG market should follow the same path, and embrace leased units to contractor standards, if contractors can demonstrate that they can deliver levels of production efficiency, operability, and safety that are similar to leased FPSOs.

OpenWater Energy has long experience in both FPSO and FLNG technology, project execution and operations & maintenance, and can assist clients to define and optimise FLNG projects

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