Cash is King - Repurposing Marginal Assets to Reduce Floating LNG CAPEX

Abstract

With renewable energy sources not currently able to move energy around the globe and forming small portions of the total global energy supply, it has fallen upon hydrocarbon sources to form the backbone of global energy movements. Hence, the recent energy demand decline, along with policy, have disproportionately impacted world-wide petroleum and LNG pricing. The impact on Floating LNG has been a heightened demand for capital efficiency, required to achieve final investment decision. A business case specific means of reducing FLNG CAPEX, has been repurposing marginal assets. Starting with a breakdown of the cost components of an FLNG facility, this paper will provide examples of the inclusion of preexisting assets into FLNG projects to reduce capital cost. The paper will wrap up with other opportunities for cost savings, to stimulate thought. Floating LNG (FLNG) technologies have been deployed to monetize mid-sized offshore gas reservoirs, avoiding constructing a sub-sea gas pipeline to a land-based LNG facility and export jetty. Containing the processing to an oceanic environment also reduces the impact on indigenous peoples as well as terrestrial flora and fauna. FLNG facilities also have the potential of serving multiple offshore fields over the life of the facility, thereby reducing the minimum size field that can be economically monetized. Interest in FLNG continues, despite the current slump in energy prices, however these challenging times are refocusing efforts on reducing the capital cost of FLNG. This paper will explore recent capital cost trends in LNG, with a focus on floating LNG, examples of realized opportunities to reduce CAPEX, and further scope for reductions. The readers will take-away from this paper a deeper understanding of: Recent trends in CAPEX for LNG, and specifically FLNG Where significant opportunities lie for cost reduction Examples of the reuse and repurposing of marginal assets to reduce cost of FLNG facilities Areas to be explored for future capital reduction This paper pulls together disparate threads into a coherent whole, providing visualization of the trends and examples of realized opportunities.