Update: Golar announces investment for first FLNG conversion

03 July 2014 12:36 Source:ICIS

(Updated throughout to include potential destinations for the floating liquefaction project.)

Bermuda-based shipowner Golar LNG has announced its foray into floating liquefied natural gas (FLNG) with key agreements to convert the 125,000cbm vessel Hilli, the company said on 2 July.

Golar LNG said the move follows a successful equity offering to enter into contracts for the ship’s conversion. The FLNG vessel is expected to be completed in February 2017, although Golar did not specify publicly where the LNG vessel would be producing.

A call to Golar was not returned before publication.

In its statement, Golar said it has also secured firm options to convert two more of its LNG vessels, which are expected for delivery in the third quarter of 2017 and the first quarter of 2018.

According to Golar, the conversion of the Hilli will start within three to four months and will be delivered into Singapore. Contracts with Singapore’s Keppel Shipyard and engineering, procurement and construction company Black & Veatch were selected for the conversion of the carrier to floating liquefaction.

Along with the Hilli, the 1976-built 125,000cbm Gimi and the 123,500cbm Gandria have been stored in layup pending conversion opportunities.

Some analysts viewed the opportunity as highly likely for a liquefaction venture proposed in either Cameroon or Mexico, although the developments in both those projects considered in early stages.

In Cameroon, Paris-based GDF SUEZ was initially considering a 3.5mtpa LNG onshore facility fed by gas from the Douala basin offshore Cameroon, but floating liquefaction was understood to have been considered as a possibility. A decision on Cameroon LNG by GDF SUEZ was expected to be made this year.

In Mexico, floating LNG has been considered a strategy to monetise the deepwater Lakach field in the Gulf of Mexico near Veracruz. Multiple liquefaction proposals along the Sonora state of Mexico were understood to be in early development.

Sources in the Americas said a project proposed for Salina Cruz in the state of Oaxaca on the Pacific Coast that would connect pipeline supplies from the gas piped into the Mexican grid from the Lakach field. State-run gas company PEMEX is in the discovery phase for the potential production in the offshore shale basin, which has the reserve potential of 850 billion cubic feet – or 24.1 billion cubic metres – in proved and probable reserves.

In addition, Golar LNG has been active in the development of the proposed 1.8mtpa Douglas Channel LNG venture that will be located near Kitimat in British Columbia. Known as Douglas Channel, the concept is a mid-scale barge liquefaction project. However, one of the developers of the project, Houston-based LNG Partners, had undergone restructuring under bankruptcy proceedings in a Canadian court. Canadian gas company AltaGas, energy supplier EDF Trading and Belgium shipowner Exmar were interested in the project, according to filings with the Canadian courts.

The aboriginal Haisla First Nation, which held 50% equity in the project, was understood to have aligned itself with Golar to continue pursuing the project separately.

Golar LNG also considered a contender to provide the floating LNG vessel for the proposed Delfin LNG project in the Gulf of Mexico. However, this could not be immediately confirmed with the counterparties.

The Delfin proposal, which is pending regulatory approval, could export as much as 13mtpa from offshore Louisiana, according to its project application. The venture is backed by a US holdings group known as Fairwood Peninsula, which is part of an India-based infrastructure company. The US Department of Energy (DOE) is considering Delfin LNG’s export application to trade with countries that do not have free trade agreements (FTAs) with the US, or non-FTA nations, which include China, India and Japan. Delfin said the project aimed to use FLNG vessels moored to an existing offshore platform, the terminus of an existing pipeline system known as Enbridge Offshore Pipelines.

However, the US Department of Transportation Maritime Authority, which would oversee regulatory permitting for offshore LNG projects, has not received any applications for proposed export projects. Ruth Liao, James Fowler

By Ruth Liao