Gasol, Teekay Team Up to Develop LNG Solution in West Africa

Gasol and Teekay have agreed to strengthen their relationship and have signed a Memorandum of Understanding (MOU) centred on the development of a unique liquefaction process.

Gasol, with the assistance of Teekay Corporation, has developed the concept of a Near-Shore LNG Production System ("NSPS™") with a view to applying this concept to gas monetization projects in Nigeria and elsewhere in the Gulf of Guinea region. The NSPS™ is based on using floating modules on barges that are berthed and moored to a fixed and protected jetty. It is designed to be used in benign waters (as found in the Gulf of Guinea) in close proximity to the shore, to produce LNG, LPG, condensates and power.

The Company's concept is predicated on already tried and tested technology put to an alternate use, thereby minimizing the development risks. The Wood Group-owned Nitrogen Dual Expander (NDX-1) liquefaction process design usesa proprietary, nitrogen refrigeration process that is simple, compact, energy efficient and flexible over a wide range of feed compositions. The NDX-1 liquefaction process is easy to operate, and will have a production scalability for this project of 2-6 million tonnes per annum ("mtpa") of LNG.

Mustang, a Wood Group company, has completed a Feasibility Study, commissioned by Gasol, to review, evaluate and optimize the NSPS design. Facility operation input was contributed by Teekay Gas Services. The NSPS feasibility study concluded that the design is technically sound and can be designed and built to industry accepted codes and standards.

While further detailed evaluation and feasibility of the NSPS will need to be conducted, the NSPS's total CAPEX / OPEX estimates for the facility are competitive on a cost per tonne of LNG production capacity as compared to other industry projects;

The parties will jointly decide the timing to proceed to Front End Engineering Design (FEED), applied on identified gas reserves in the Region. The project lead time from start of FEED to first delivery of LNG cargoes is 3.5 to 4 years and is therefore an economic alternative to both onshore traditional LNG plants and FLNG. Gasol is currently in negotiations with various gas reserve owners and LNG partners/off-takers regarding the application of NSPS to emerging projects; the initial feedback to NSPS is encouraging.

In case NSPS does not suit the development of a particular project, alternate floating LNG (FLNG) solutions would be considered.

Generally, offshore or floating LNG production is cheaper than onshore / conventional liquefaction. It also offers additional advantages of stimulating the development and monetisation of smaller and more remote gas reserves, being quicker to build, as well as being adaptable to specific projects.

Mark Kremin, Teekay's Vice President of Gas, commented, "The progress made on the NSPS confirms the development of a viable alternative liquefaction solution for stranded gas in West Africa. We are pleased to reinforce our partnership with Gasol through the involvement in this initiative and to provide alternate Teekay FLNG solutions as applicable; we look forward to contributing to the next development phase in the various project opportunities."

Scott Worthington, Mustang's President of Midstream Business Unit, commented, "The completion of the NSPS Feasibility Study clearly shows there is more than one technically feasible design concept for developing floating liquefaction projects. Mustang's extensive offshore topsides process design experience coupled with Wood Group's simple and efficient NDX-1 liquefaction process will certainly strengthen Gasol's ability to grow its position in this highly competitive LNG business sector."

Soumo Bose, Gasol's Chief Executive Officer, commented, "The development of the NSPS is an important step in Gasol's progress in developing gas monetization projects in Africa. With vast amounts of stranded gas reserves awaiting monetization solutions in the Region, NSPS offers a commercially attractive and technically robust LNG alternative, while catering for host nation priorities of supply to domestic industries. Gasol is proud of what has been achieved and appreciates the support from Teekay and Mustang in this initiative. We are particularly delighted to expand our cooperation with Teekay, to cover the development of NSPS and FLNG for Gasol's projects in Africa."