Lowest-cost Liquefaction In US Gulf

Eric H Namtvest's picture
Eric H Namtvest, Executive VP, Global LNG Services
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LIQUI-MAX Vessel

LIQUI-MAX™ Vessel (LMV), capable of LNG production of 12 million TPA
 

THE GLOBAL LNG SERVICES MISSION AND OFFERING

Supporting the growth of global energy supply at affordable levels is critical, as is the replacement of coal as a fuel. In a global context, coal-related air pollution causes seven million deaths per year. 33 billion tons of CO2 is currently being emitted versus the Paris objective of 18 billion tons by 2040. Coal to gas switching, using low-cost natural gas converted to LNG, is the ideal mechanism to reduce global emissions. It is therefore important for global consumers to have access to low-cost US LNG.

Liquefaction of gas is a commodity business in which the lowest cost provider is chosen. The lowest cost liquefaction contract on the US Gulf Coast (USGC) was the 2010 anchor contract between two major industry players at $2.25 per MMBtu. The most recent contract was priced at $2.75 per MMBtu. Even lower prices are required if the US is to competitively participate in the continued global growth of LNG.

GLS was founded in 2013 with a management directive of reducing the cost of liquefaction by an order of magnitude. The key focus was to leverage significant economies of scale and series production of standardized large-scale, air-cooled liquefaction vessels that would meet the strictest global regulatory standards for safety and environmental impact.

GLS developed an intellectual property portfolio including the patented LIQUI-MAX™ Vessel (LMV), capable of LNG production of 12 million TPA. The leading industrial companies in the liquefaction space, TechnipFMC, Air Products and Chemicals Inc. (APCI), Baker Hughes – a GE company (BHGE), and Emerson participated in the development and verification of the LMV Basis of Design and will continue to participate in completion of the first project at the Main Pass Energy Hub™ (MPEH). GLS has contracted with TechnipFMC as the EPCIC contractor to complete the pre-FID engineering for the LMV with FID scheduled for MPEH in 2021.

LOWEST COST LIQUEFACTION PROVIDER

GLS is offering its anchor off-taker an industry-low tolling fee of $2.16 per MMBtu for the full volume of the first LMV, providing US shale producers a pathway to global markets. The GLS cost advantages stem from GLS’ patent-protected innovations:

✓ Application of proven technology with no residual technology risk

✓ Patented air cooling instead of environmentally problematic water cooling for the liquefaction process

✓ Largest conventional ship hull to maintain competitive bidding

✓ Pre-processing located off the LMV provides maximum space on the vessel for liquefaction facilities

✓ Stay-on-station design eliminates time-consuming relocation of the vessel under adverse metocean conditions

✓ Series production of standardized LMVs at Asian yards supports the global “plug and play” market for access to stranded gas.

The MPEH Project’s excellent location east of the Mississippi River entrance, outside the main shipping-lanes and inland waterways, and away from the congestion of the existing and proposed projects in the western Gulf, provides substantial logistical operating cost savings for prospective LNG off-takers of as much as $60 million per year per LMV. This location provides ready access to abundant and favourably priced gas supply from multiple production basins.

The Project will be permitted by the U.S. Maritime Administration (MARAD) as a Deepwater Port for the liquefaction, storage, offloading, and export of LNG. MPEH already holds DOE approval for export of 24 MTPA of LNG to Free Trade Agreement nations. In line with established DOE procedure, MPEH will apply for approval of export to non-FTA nations following MARAD’s approval. The DOE recently released a study which essentially eliminates the risk of not receiving non-FTA approval. The outstanding permitting track record of the GLS team and the well-known regulatory requirements of the Deepwater Port Act (DPA) further reduces risk associated with obtaining necessary licenses.

GLS is a Norwegian-based company with offices in several countries, including the US. GLS is led by its founder Dr. Paul Eckbo and a team of highly experienced principals and board members. Peter Mellbye of the GLS BOD built the Statoil gas business into the largest gas business in the world outside Russia. The members of GLS’ management team have a long history of offshore permitting, operating and construction experience.

Off-taker agreements are in the process of being negotiated with credit worthy counter-parties for the full 12 MTPA of capacity from the first LMV. GLS anticipates substantial world-wide demand for its low-cost liquefaction solution, andis pursuing projects in the US Gulf of Mexico, Canada, Africa,the Middle East, and Latin America.

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