Small is beautiful and is certainly an option. With the world now looking for supplies of natural gas, attention has to be focused on the small and medium-sized gas fields.
Floating units that freeze natural gas so as to form liquefied natural gas (LNG) offshore and then prepare it for offloading and further transportation on keel to the market will generate these new options – options that have not previously existed.
Some 2,500 offshore gas fields contain natural gas that can be converted into 5 million tonnes or more of LNG. Less than 100 of these are big enough to be developed using conventional LNG onshore plants. More than 95% of the gas fields are waiting for new solutions.
Some of these solutions will soon be available. FLEX LNG, a two-year-old company whose objective is to commercialise the world’s first floating natural gas liquefaction units, and one of the world’s major shipbuilders, Korea’s Samsung Heavy Industries, are just three years away from delivery of the very first FLNG vessel. Contracts were signed long ago and the first steel will be cut in September next year.
“FLNG vessels are going to change the whole LNG industry,” predicts Trym Tveitnes, co-founder and Chief Technical Officer of FLEX LNG. His company is investing a lot of money and he knows that no one else has walked this line before.
Shortage of gas
FLEX LNG has ordered not only one but four new vessels. It also has options to order additional vessels from Samsung Heavy Industries.
All these vessels will produce, liquefy, store and offload gas. They will be 336 metres long and able to store 170,000 m3 LNG – similar to today’s large LNG carriers, and in addition, they have 50,000 m3 condensate tanks. Their lifetime is expected to be 40 years.
Mr Tveitnes reels off the arguments for the company’s fresh initiative: “Many have foreseen a shortage in LNG supply in the years to come. Many have seen the increasing costs for land-based liquefaction plants. Many are aware of the long lead times for land-based plants. Many are aware of the huge potential of smaller gas fields and associated gas offshore. And of course many have thought about FLNG as a solution.”
But not too many have thought that an offshore medium-scale liquefaction solution could be cost competitive and thus commercially attractive. Only a few have therefore started to develop FLNG concepts. And indeed only FLEX LNG has so far placed orders for vessels.
The new concept has been developed through a close collaboration between the owner and yard, assisted by class.
Samsung’s vice president C. Y. Kim, who is in charge of these new vessels being built at Samsung Heavy Industries, is not impressed by the LNG industry’s ability to be frontrunners: “The LNG industry in general has for years been conservative,” he says.
But he is impressed by this leap into a new era and continues; “The newcomer, FLEX LNG, has brought new ideas and then helped to create new solutions for this industry. That is very positive.
I have a strong feeling that this new concept with an optimised design to comply with various field requirements will have its rightful place in the market soon after delivery.”
Opportunities in the future
Samsung has for years been one of the leading yards for LNG vessels. The yard has today some 30 LNG carriers under construction. Its market share is about 35%. Although the yard is among the Korean top three and a major yard globally, C. Y. Kim emphasises:
“We are not competing in the mass production market. High value ships are our main focus area.”
Based on this and the fact that Samsung has a 70% market share when it comes to drill ships and has built ships for producing, storing and offloading oil for more than 15 years, FLEX LNG is expecting well suited vessels to be delivered into a market that is already waiting for this solution.
One vessel is dedicated for Progress LNG, a project offshore Nigeria. A wide approach to the overall risks of relevant projects will be taken, and FLEX LNG will also be looking for opportunities connected to the actual locations or partners developing the field.
As the demand for gas is expected to increase, new areas will be explored and developed. The FLNG vessels will be tailor-made to move into these remote areas.