BHP gets behind floating LNG

BHP has ended years of uncertainty following its commitment this week to support floating LNG processing off Scarborough, in Western Australia.

The plans for the $10 billion joint venture FLNG between BHP and ExxonMobil began last year after plans to develop the gas through expansions of Woodside’s Pluto LNG plant and Chevron's Wheatstone plant fell through.

However, the partners were still mixed on the processing option, after BHP’s petroleum head Tim Cutt still highlighted a preference for developing the LNG through existing onshore infrastructure, despite being granted government approval for the FLNG plant late last year.

Now Cutt has reversed his belief, throwing his support behind FLNG, according to The West Australian.

We've looked at all the different technologies with ExxonMobil and we're now fully aligned with ExxonMobil," Cutt said following his signing of a new deepwater oil and gas joint venture with Pemex.

http://www.miningaustralia.com.au/oil-gas/news/bhp-signs-mou-with-mexican-petroleum-powerhouse

"FLNG is the direction we're heading. We've got a lot of confidence in the technology.

"The fact the gas is dry actually helps floating technology quite a bit. The quality of the material work is good and ExxonMobil is an excellent operator.

“So we know we’ll go forward.”

ExxonMobil also reportedly told the West Australian that “FLNG is considered the lead development option”.

If the project goes ahead, it will be the largest FLNG facility in the world at 495 meters long, 75 meters wide and capable of processing between six to seven million tonnes of LNG per year.

ExxonMobil has previously said the development would involve the drilling of 12 wells in two phases, starting with seven over the period from 2018 to 2019.

In addition to the gas treatment and liquefaction facilities, the vessel would be fitted with up to 10 storage tanks inside, with an on-board storage capacity of around 380,000 cubic meters.

It is estimated 80-110 cargoes would be offloaded from the facility each year.

The two aren’t the only companies looking at FLNG off Australia’s coast line.

Australia is set to become the birth place of FLNG, with Shell currently building the world-first Prelude structure which is set to be moored off the WA coast by 2016.

Santos and GDF Suez are also looking into the development of a FLNG vessel for the Bonaparte Basin, 250 kilometres west of Darwin. A final investment decision is expected in mid-2015.

FLNG technology allows for the development of gas fields considered too remote or too small to develop via traditional methods previously and is being seen by many as more advantageous then onshore facilities due to high costs.

Shell Australia’s former chairwoman Ann Pickard has previously touted FLNG as the saviour of LNG development in Australia.

"We do see it as probably the potential saviour of the Australian LNG industry over the next decade or so."

“Australian LNG is the highest cost globally,” she said, stating that countries like the United States and Canada could export to Japan 20 per cent cheaper.

 

To see images of Shell floating its massive Prelude FLNG plant, click here.

For an indepth explainer of FLNG click here.