Why FLNG is a strong option for monetising gas resources

Tom Haylock's picture
Tom Haylock, Business Development Manager, KANFA Aragon
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Essentially FLNG is attractive as it is possible to build a liquefaction terminal cheaper than a traditional onshore LNG plant. This is possible through utilising the FPSO model for project execution where specialist yards enable higher productivity and control of the work compared to having to build on site at the final location. Also it avoids common issues with building onshore such as lower environmental impact and “not in my back yard” challenges which can adversely impact project economics.

FLNG enables an entire LNG facility to be contained within one vessel where the process plant can be modularised and installed in place in the same shipyard. This removes many issues that onshore LNG plants have had with regards to building on site in remote locations in stick built fashion which provides large logistics, project management, interface and quality challenges. Furthermore, it removes the issue of availability of a sufficiently trained, experienced, and often expensive construction workforce at the destination location.

The additional benefit that FLNG provide is that it also opens up previously uneconomic stranded gas resources offshore that could not be monestised using other models. As a result, the number of projects where FLNG is applicable is much larger compared to those where traditional onshore LNG is applicable.

FLNG is often judged compared to onshore LNG when in reality it is a distinct sector in itself now. One of the main downsides to FLNG often identified is that there is a practical limit to how much LNG it is possible to produce on one vessel, and so to some it is believed that FLNG cannot compete where large productions rates (~4mtpa +) are desired. In reality this is incorrect, FLNG is capable of producing large rates of LNG but simply through having multiple vessels while remaining cheaper than onshore LNG in most cases. This presents additional benefits through production of identical units for a project which can be done in a step-wise fashion to allow the execution, scope and CAPEX requirements to be more manageable. In addition, such multiple unit developments can be expected to benefit from economies of scale.

So really FLNG can be seen to be a game changer in being able to monetise a larger pool of gas resources in a more cost effective manner. - Article end -

What do you think? Is FLNG a more cost effective option to monetise gas resources? Please give your opinions below.

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