Why floating liquefaction and why in the United States?

Fred Jones's picture
Fred Jones, CEO & Founder, Fairwood and Delfin LNG
Matthew Weil's picture
Matthew Weil, CFO, Delfin LNG
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Will floating liquefaction become the future of the gas industry? Gastech News asked Fred Jones and Matthew Weil for their thoughts on the advantages of floating liquefaction and why the U.S. is about to change the global LNG industry.

Note: Delfin LNG is poised to become the first deepwater floating liquefaction project in the U.S. Read the interview below to learn more about this unique and exciting project.

Gastech News: Mr. Jones, could you walk us through your background?

Fred Jones: "I’ve been in this industry in some capacity for 40 years. I began my career in shipping, transporting dry bulk and later crude-related cargoes in the 1970s for a company called Phibro. During these formative years, I developed a lasting passion and appreciation for “movable assets”, a concept which has driven many investment decisions over the course of my career, including Delfin. After Phibro I became a founder-shareholder of Marc Rich + Co AG, which later morphed into the $60bn commodities business now called Glencore plc. Since leaving Marc Rich + Co AG, I have invested in various energy and infrastructure projects throughout the world."

Gastech News: What are the key reasons for developing a floating rather than an onshore liquefaction project?

Fred Jones: "Floating liquefaction has multiple benefits. First, our floating liquefaction vessels will be movable. This is a significant benefit in the event of inclement weather or to the extent that gas markets change significantly over time. Second, projects that are both floating and brownfield, meaning they utilize existing infrastructure, can be built in a timely and cost-competitive manner. Third, floating projects constructed in contained shipyards carry significantly less risk of cost overruns or labor shortages. And finally, deepwater floating projects in the U.S. are subject to a transparent and efficient permitting process. All of these factors allow floating projects to maintain commercial flexibility."

Gastech News: Why floating liquefaction in the U.S. over somewhere else in the world?

Fred Jones: "First, the U.S. is blessed with abundant gas reserves, which is critical to a customer interested in securing long-term supply. Second, the U.S. is governed by rule of law and promotes the idea of private ownership of assets. I have spent decades doing business in less-supportive political environments, and I believe the incremental risk created in those instances is enormous. Third, the U.S. has an extremely advanced infrastructure system that greatly facilitates the transportation of gas. Fourth, the U.S. has accumulated enormous intellectual capital from generations of being in the oil and gas business. I truly believe projects like Delfin are part of the American DNA. Finally, the U.S. is a logical gas exporter given the geopolitical advantages it affords."

Gastech News: Where is Delfin LNG located and what are its main features?

Fred Jones: "Delfin will be located fifty miles off the coast of Louisiana in the Gulf of Mexico. The project is brownfield in nature and will consist of four primary components: i) an onshore gas compressor station, ii) an existing, 42” pipeline in the Gulf of Mexico, iii) an offshore, deepwater port equipped with four moorings, and iv) four floating LNG vessels with total liquefaction capacity of 9.2 mtpa."

Gastech News: What is your view of the current global LNG market?

Fred Jones: "I am quite constructive on the long-term prospects for the global LNG market. Over the past 6-9 months, some have highlighted the drop in crude oil prices as a sign that U.S. LNG exports will no longer be competitive. I do not share this view. For the reasons highlighted above, I believe the U.S. is well-positioned to become a major LNG exporter and that Delfin specifically will be dynamic and cost-competitive. Further, I believe falling oil prices could actually be a long-term positive as lower spot LNG prices are pulling new LNG buyers into the market."

Gastech News: What do you think of U.S LNG exports to Europe?

Fred Jones: "I certainly believe U.S. gas has a place in Europe, and Delfin is well-positioned to become part of the supply chain that facilitates that trade. I believe the total delivered cost of gas to Europe from the U.S. will be competitive, and the geopolitical benefits for both buyers and sellers will be significant. I would highlight the Memorandum of Understanding that Delfin signed with LITGAS, a Lithuanian buyer, earlier this year as evidence of our intention to be an active participant in the European LNG import market."

Gastech News: Matthew, what are you most looking forward to at this year’s EAGC conference, and what is your final message to our readers?

Matthew Weil: "We are really looking forward to the conference as an opportunity to meet various industry participants and continue to educate the market about the significant advantages of floating liquefaction and our project, Delfin. We think U.S. LNG and floating liquefaction are the future of the industry, and Delfin fits well into this picture."

Thursday 19th November, 09:30am - Fred Jones will take part in "The Executive Energy Leadership Panel" discussion at the EAGC in Geneva. Other panellists will be Martin Houston, Chairman at Parallax EnergyGertjan Lankhorst, Chief Executive Officer, GasTerra and many more.

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