Surf's Up for McDermott

McDermott International has received a momentous contract, worth about $2 billion, from Inpex for the Ichthys gas/condensate field offshore Australia. The surf contract is the largest subsea contract the company has received to-date.

The Ichthys surf project includes engineering, procurement, construction, installation and pre-commissioning of production flowline systems, a MEG injection system, plus start-up condensate transfer and fuel gas transfer flowline systems, control systems, as well as other associated SURF elements in water depths of up to 902 feet (275 meters).

McDermott will also install mooring systems for the FPSO and central processing facility, as well as installation engineering for future flowlines, risers and umbilicals. Engineering work has commenced with fabrication slated for 2013.

"McDermott has a long track record working on EPCI projects offshore Australia," said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer, McDermott. "This major SURF award firmly endorses McDermott's core EPCI competencies and our competitive subsea construction vessels, combined with Heerema's installation strength and the team's alignment with INPEX. This is a large scale and complex development, and we are firmly behind promoting the success of this LNG project."

As the demand for liquefied natural gas surges, Australia has become the go-to place to extract this much needed form of pay. The county has around a dozen giant gas projects under development to feed Asian markets, including Japan, which is vying for more gas as an alternative fuel following the recent troubles the country encountered.

Since the country has shut down 80 percent of its nuclear power capacity since the earthquake, Japan, the world's third-biggest oil consumer, is now the world's top LNG importer. LNG is the go-to commodity since it is clean-burning, sold at a significant premium and is in abundant supply.

Moreover, this LNG trend is expected to continue, say industry analysts, with Qatar and Australia at the fore-front, becoming major suppliers. However, Australia is geared to become the major gas supplier in the Asia-Pacific region. The country's stable political environment makes the country a safer place to conduct business and its close proximity to Asia help suppliers save on shipping costs.

"The strength of the Ichthys project is Inpex's experiences in the Asia-Oceania region; good coordination and relationship with Total, joint venture participant; and support from Australian and Northern Territory governments," said Toshiaki Kitamura, Representative Director, President and CEO of Inpex. "Additionally, the company plans to spur job growth by hiring 600 plus new employees for the project," he added.

The Ichthys LNG Project, greenlighted for development in January 2012, is a Joint Venture between INPEX (76 percent, operator) and Total (24 percent). In 2000, Ichthys was discovered by three exploration wells, and then appraised by five wells three years later. On March 27, 2009, the partners reported that the field is commercially viable.

The $34 billion development plan for Ichthys includes several subsea wells tied-back to a central floating offshore processing facility for gas, and an FPSO for condensate. Gas from the Ichthys field, in the Browse Basin approximately 124 miles (200 kilometers) offshore Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The gas will then be exported to onshore processing facilities in Darwin via a 552-mile-long (889-kilometer-long) subsea pipeline.

The development contains an estimated 12.8 Tcf of natural gas, and is expected to produce 100,000 bpd of condensate, at peak production, and 1.6 MM tons of liquid petroleum gas each year.