Will FLNG be a game changer?

[This is part of my application to Young Gastech Conference in Tokyo - April 2017, to reflect my own humble understanding, so please feel free to comment and give me feedback]

Having attended Offshore Technology Conference in Asia (OTCA) 2014 and 2016, listening to presentations and discussing with the key people who brought Shell Prelude and PFLNG SATU from the most ambitious idea into reality, I was totally inspired and convinced that FLNG (Floating Liquefied Natural Gas) will be a game changer in the Oil & Gas industry due to its novel way of gas production and its mobility. 

The traditional production of natural gas requires a floating/fixed platform in the ocean, a pipeline system to transport the product to shore and an onshore LNG plant to turn gas into LNG.  FLNG eliminates the need of expensive pipelines by combining the existing technology of a floating storage platform and an onshore LNG plant into one offshore unit. In terms of operation, being able to complete the whole process of natural gas extraction, pre-treatment, liquefaction, storage and offloading in one FLNG significantly reduces the time to bring gas from the ground to the market, which means generating cash at a much faster rate. In terms of construction, the modular approach allows most of FLNG parts being built in an environment-controlled condition such as in a shipyard. Therefore, the delivery time of each module can be estimated more precisely, hence reduces the lead time and improves the construction efficiency. Moreover, with both case of Prelude of PFLNG SATU, the projects had brought together the extensive experience of the major players in the industry such as SHI and DSME for shipyard construction, Technip for product processing topsides, GTT for LNG containment system, GE for machinery solutions, etc. Their collaborative work has created many innovative solutions that reduced further the construction and operation cost.  Taking all into consideration, it was estimated that FLNG reduces about 35-50% of production cost than the traditional method.

The mobility of FLNG opened a great possibility of monetising stranded gas fields around the world. In the case of Petronas, they own several small and remote offshore fields in different areas of Malaysia. It was initially considered uneconomical to build a whole onshore LNG facility and pipeline for each gas field. However, the 20-year lifespan of a FLNG offered an ideal solution: the vessel can move from one gas field to another when the current one is depleted without incurring a significant cost. Therefore, PFLNG SATU was built and deployed successfully and PFLNG2 is currently under construction. After the success PFLNG, other floating platform operators also started considering the possibility of building FLNG to lease. The emergence of leasing option in FLNG will potentially reduce the cost further, which will allow smaller national/international oil companies to tap in their local resources, and might make the local price of LNG even cheaper than ever.

In conclusion, the FLNG’s compact method of natural gas production and its capability of moving between different gas fields will have significant influence on the LNG price in future. The success of Shell and Petronas will inevitably attract the interest of other oil majors such as ExxonMobil, Chevron, Total and BP as well as other stakeholders in FLNG. The LNG market is expected to be truly dynamic and fascinating in a near future.

References:

https://www.ship-technology.com/projects/petronas-floating-lng-facility-pflng-1/

https://www.shell.com/about-us/major-projects/prelude-flng/prelude-flng-an-overview.html

Acronyms:

SHI: Samsung Heavy Industry

DSME: Daewoo Shipbuilding and Marine Engineering.