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www.tri-zen.com
Tony Regan
Principal Consultant
SEAAOC 2012, Darwin
18June-20 September 2012
Prelude – where next
Is FLNG poised to “take off”
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Introduction to TRI-ZEN
TRI-ZEN is a consulting business focused on energy and utilities
We cover upstream & downstream, technical, commercial & financial
We offer a wide range of services:
Consulting
Strategy
Business Development
Project Management
Organizational Development
Alliances
Due diligence for M&A, project finance and IPO’s
Lead consultants located across Asia with a global extended network
Clients include the leading companies in energy and professional services
based in Asia, Europe & North America
Tri-Zen, in association with engineering consultants , Energy & Power Ltd,
provide comprehensive advice and services at every stage of an LNG/FLNG
development
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FLNG - Prelude
15 years of research
1.6 million man hours working on
the engineering challenges
Front End Engineering & Design
awarded Samsung-Technip in July
2009
Final Investment Decision May
2011
Built at Samsung Heavy
Industries’s Geoje shipyard in
South Korea
Enters service 2016
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Shell has entered into a Master Service Agreement with Technip and Samsung for the
design, construction and installation of multiple floating liquefied natural gas facilities
over a period of up to fifteen years
Picture courtesy of Shell
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FLNG - Prelude
Designed to be on site for 25 years
To be located in the Browse Basin
off Western Australia
Will tap into 3 Tcf gas reserves in
Prelude & Concerto fields
5.3 mill tonnes of liquids producing:
3.6 mtpa of LNG
1.3 mtpa of condensate
0.4 mtpa of LPG
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Floating liquefaction
Started with 14 different
options on offer
Hull: 7 vessel, 7 barge
Storage from 0.5 mill tn to
5.8 mill tn
Flex LNG
1.7 MTPA LNG
SPB Tanks SS
Nitrogen Cycle
Cost indic. $700/TPA
Shell
LNG 3.5 MTPA
Membrane Tanks
DMR/ACD
Cost indic. $1700/TPA
Hoegh LNG
Flex LNG
Shell
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FLNG – Pacific Rubiales (Exmar)
Liquefaction
70 MMSCFD
0.5 MTPA
LNG Storage 14,000 m3
Offload to tankers up to 140,000
m3
Storage & Regas
Tolling basis for 15 years
Planned start 2014
Pacific Rubiales Energy Corp.
Offshore Columbia (Caribbean)
LNG Supply to Caribbean Islands
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Picture courtesy of Exmar
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FLNG - Petronas
Sarawak
1.2 MTPA
FEED Completed Feb 2012
Technip/Daewoo
Turret Moored
Membrane Storage
Sanctioned March 2012
Start Up Planned Q4 2015
Sabah
1.5 MTPA
4 Bidders for FEED – 2 to be
awarded
Samsung, Daewoo and Hyundai +
MMHE?
Sanction planned late 2013 ??
Start up planned Q4 2016
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Picture courtesy of Technip
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Projects
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LEADER TOPSIDES LNG HULL STORAGE PROJECT
(CONSTRUCTOR) LIQUEFACTION MTPA CONTAINMENT m3 STATUS
Shell Technip Barge 220,000+ Prelude Sanctioned,
(Samsung) Shell DMR Membrane 90,000 LPG+ EPC in progress
126,000 Cond Sunrise next?
Partner Inpex for Abadi (2.5)
4 projects planned
Petronas Technip/Linde Barge FEED completed Feb 2012
(DSME) MR Membrane Sanctioned Mar 2012
Overtake Shell?
Flex LNGCostain/Kanfa
/WParsonsShip 170,000+ Interoil PNG FEED
(Samsung) Dual Nitrogen SPB (SS) 50,000 LPG/Cond Generic - Det Eng
Höegh LNG KBR Ship 190,000+ Petromin FEED
(DSME)Niche
(Methane/N2)Membrane 20,000 LPG+ Generic FEED
19,000 Cond Tamar, Israel pre-FEED
Black & Veatch 14,000
SMR Part of value chain
Linde Barge 180,000+ PTTEP Australia
MR SPB?? 25,000 LPG+ Cogee FEED
25,000 Cond
TBA Bonaparte
Studies Conceptual Design
Exmar 0.5 BargePacific Stratus Energy
Colombia
SBMLinde 2.5
GDF Suez/Santos Doris 2 Studies
3.5
1.2 ???
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Projects
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LEADER TOPSIDES MTPA HULL STORAGE STATUS
(CONSTRUCTOR) LIQUEFACTION m3
Excelerate EBLV Black & Veatch 3.0 Barge 250,000 Concept
(Exmar) SMR Membrane (incl. LPG) FEED in 2012?
Inpex JGC 4.5 Barge Feasibility
Mixed
RefrigerantNow with Shell
Aker/Statioil Aker 5.8 Barge FEED
Mixed
RefrigerantShelved
BW Offshore Mustang 1 Ship Concept
Nitrogen SPB/Moss
Hamworthy Hamworthy 0.5-2.2 Ship Field Specific Studies
Nitrogen Field Specific
TGE Marine TGE 0.4-1.5 Ship Concept
(CMIC China)Mixed
RefrigerantType C
ConocoPhillips ConocoPhillips 5 Barge 350,000 Concept
Optimised
CascadeReview in 2012
Sevan Marine Kanfa 1.5 Circular FPSO 200,000 Concept
Nitrogen Tank
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The drivers for FLNG
Higher gas/energy prices
Growth in gas demand
36% increase between
2010 & 2020 (BP)
66% increase in Asia
Concern about declining
domestic gas production
(Europe & Asia)
Explosive growth of LNG
demand and development
of new sectors –
transportation fuel, bunker
fuel
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2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
North America Cent Amer/Caribb South America
Europe Asia Middle East
LNG Demand Forecast
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Drivers for FLNG
Cost effective way of monetising stranded/remote gas reserves
Design flexibility – re-deployable, can handle wide range of gases, can draw
from multiple fields
Problems with conventional LNG projects – long delays getting permits,
delays, cost over runs, shortage of key resources
Can utilise proven liquefaction technology – plenty of vendors
Potential for considerable cost savings:
No offshore production and compression stations
No subsea pipeline to shore
No onshore plant/berths/utilities
Modular construction in shipyards
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LNG Project Breakeven Costs
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Sakhalin 2 Pluto 1 Browse Wheatstone GLNG APLNG QCLNG DSLNG Gorgon Ichthys Prelude
US$/MMBtu
FOB price needed to achieve a 12% IRR
Source: Deutsche Bank Proposed projects
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Indicative FLNG CAPEX – Lowest Cost Scenario
(1.7 MTPA, Lean Gas no LPG/Condensate Production)
Building Block $ million
Hull & Accommodation 580
Turret 40
Gas Reception 70
Feed Gas Compression later
Gas Treatment 50
Gas Liquefaction 360
LPG Stabilisation option
Power Generation 80
Utility Systems 80
Offloading 10
Interconnecting Pipework 30
Total 1300 765 $/TPA
Contingency 30% 390
Owner's Costs 130
Total 1820 1071 $/TPA
Production 1.7 MTPA
CAPEX Depreciation (15 years) 71 $/T
CAPEX Depreciation (15 years) 1.4 $/MMBTU
Metric
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OPEX (Operating Cost) Estimate
1.7 MTPA LNG Production
Component $ million/year
Fuel Gas (15% Gas Feed) 17 $1.5/MMBTU
Manning (120 people) 15
Maintenance (4% CAPEX) 38
Tugs 10
Base Support, Helicopters 10
Miscellaneous 10
Total 100
Production 1.7 MTPA
Production Cost 59 $/ton
Production Cost 1.2 $/MMBTU
Note: Excludes any project financing costs
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Proposed Floating LNG projects
Liquefaction
Firm
Existing
Proposed
Flex/InterOil, 2 mtpa
PNG
AUSTRALIA
Greater Sunrise, 3.5 mtpa
Bonaparte, 2 mtpa
Shell/Prelude, 3.5 mtpa
Scarborough, 6 mtpa
Echuca Shoals, 1.5 mtpa
Abadi, 2.5 mtpa
INDONESIA
TIMOR LESTE
PTT Cash Maple, 2 mtpa
Evans Shoal, Hoegh/DSME, 3 mtpa
Petronas FLNG, 1 mtpa Petronas FLNG 3 mtpa
Others: Iraq; Shell, Mitsubishi 2 mtpa Israel; Nobel, Delek, DSME 3 mtpa Colombia; Exmar, Pacific Rubiales 0.5 mtpa USA, Excelerate 3 mtpa
Current focus is South East Asia & Australia but likely to go global over next few years – Iraq, Israel, Colombia, USA
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How will FLNG fit in?
Still challenges but there is a place/need for FLNG and it could fit in:
By clearly demonstrating:
Substantial reduction in project development costs and time
Operating efficiency similar to onshore LNG
Lower CAPEX than conventional LNG
OPEX no higher than conventional LNG
Faster monetisation of reserves
Sponsors have kept it simple – not the time to be testing new technology
By having experienced, financially strong sponsors – preferably able to fund from balance sheet rather than project finance
By having a strong marketing team – to convince skeptical buyers (but we have moved back into a sellers market)
Probably more than just deepwater offshore – could be sound opportunities inshore or berthed
Could be a call for small scale barge mounted FLNG
…………………..it won’t be easy but the time is right!
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What will it cost?
Early capital cost estimates for US$600- 1200/tpa
Recent indicative costs – US$1,500/tpa plus/minus 30%
Flex LNG indicating US$ ~700/tpa for 1.7 to 2.0 mill tonne liquefaction
capacity
Estimate that the capital cost of Shell’s Prelude FLNG facility will be just over
USD6bn or about USD1, 700 per tonne of capacity
Significant variations depending on gas composition (high/low C3, C4,
condensate) and CO2, N2 content,
High liquids content considerably increases commercial attraction
CAPEX figures exclude field development costs
Cost figures indicative until full design completed for specific location/resource
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Insufficient LNG supply
LNG demand expected to double between 2010 and 2018/2019
Insufficient new liquefaction capacity coming on to meet demand – about 75
million tonnes
But, 338 million tonnes of new liquefaction capacity is being offered by
project sponsors who say they expect to take FID between 2012 and 2014.
Have recently seen a significant increase in the number of new projects being
offered into the project pipeline including 166 million tonnes from the USA
From famine to feast – unprecedented number of proposed projects
However, not all will go ahead
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2011 2012 2013E 2014E 2015E 2016E 2017E 2018 2019 2020
Existing 270 275 280 279 280 280 280 278 276 276
Under construction 0 0 5 18 40 62 75 75 75 75
Proposed 0 0 4 12 47 95 169 272 330 352
Speculative 0 0 1 3 4 5 21 84 122 130
Total 270 275 290 312 371 443 545 710 803 833
Existing planned and proposed liquefaction capacity
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A path forward
Unprecedented number of potential projects being offered into the project
pipeline
Too many, much more difficult for customers to choose
Could see the emergence of business clusters/ areas of prime focus
Will make it more difficult for projects not in these focus areas to gain traction
with customers (e.g. Russia, Nigeria)
Likely to see FLNG emerge as the 5th cluster. Although not geographic,
another 40 million tonne cluster is emerging
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USA 40 mill tn 2016-2018
Canada 40 mill tn 2016-2020
East Africa 40 mill tn 2018-2022
Australia 60 mill tn 2014-2017
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Oil versus gas pricing
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US$/MMBtu
Gas Henry Hub $/MMBtu Crude WTI $/MMBtu
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LNG as a transportation fuel
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Increasing environmental and economic drivers to use LNG as a transportation fuel
LNG cheaper then fuel oil and much cheaper than diesel
Growing interest in using LNG as a truck fuel in USA and China. Australia emerging
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LNG versus fuel oil & gasoil NW Europe
US$/MMBtu
1% fuel oil NW.Eu German Gasoil LNG UK
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LNG as a transportation fuel
LNG service stations supported by
small scale liquefaction plants
Floating storage an attractive
option as LNG bunker storage in
ports without an LNG terminal
Bunkers may also be supported by
small/medium scale liquefaction
plant
This could be FLNG in the port or
against a berth.
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LNG Bunker barge
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Tel: 65 6254 4791 tony.regan@tri-zen.com