Industry Counts on FLNG to Beat the Odds and Live Up to Promise

PETRONAS Also Adopts FLNG

Elsewhere, Petroliam Nasional Berhad (PETRONAS) has muscled into the FLNG game by building two units, the first of which could beat Shell’s Prelude FLNG to first gas in late 2015 or early 2016.

PFLNG 1 Hull Launch at DSME yard in South Korea, Source: PETRONAS

As a national oil company, PETRONAS enjoys an advantage over other operators as it can choose to sell its produced LNG either to domestic users or export market.

Meanwhile, PETRONAS is looking at designing and building one FLNG for redeployments across multiple stranded fields off Malaysia. Without commenting directly on the project cost, PETRONAS Senior Vice President Colin Wong told reporters that the cost of the first unit, the PFLNG-1 to be installed in the Kanowit field, works out to within $10 per MMBtu.

That is slightly above the $8.16 per MMBtu breakeven price for Prelude FLNG projected by a Massachusetts Institute of Technology paper, which however indicated that Prelude FLNG’s breakeven level could exceed $12 per MMBtu if production of lean natural gas is included in the calculation.

Projections by Technip – the engineer of Prelude and Browse FLNGs – revealed that the market could eventually “trend towards higher capacity units mainly to support large offshore lean gas field developments” as “economies of scale drive down the cost of LNG produced from a floating platform.”

In contrast, Sullivan of WorleyParsons argues for near shore FLNGs of up to 2 Mtpa and minimal pretreatment facilities as cost effective solutions to fast track production in areas with existing pipeline infrastructure.

Regardless of size, market acceptance of the FLNG technology will also hinge on the performance of the first FLNGs starting up in the next few years.