LNG

US engineering company McDermott International was awarded a contract to provide front-end engineering and design services for the Ichthys liquified natural gas field development of Japanese energy firm Inpex Corp. offshore Western Australia.

The Houston, Texas-based company said the award was for a booster compression module with optional engineering, procurement and construction (EPC) for the project.

The booster compression module will be added to the Ichthys LNG central processing facility, located offshore the northwest coast of Western Australia.

“This award illustrates McDermott's continuing expertise in complex offshore EPCI,” said Ian Prescott, McDermott's Senior Vice President, Asia Pacific.

“Our work to date demonstrates our qualifications to deliver smart solutions in challenging environments - and to the highest safety and technical standards,” stated Prescott.

McDermott has been a long-standing operator in the Asia-Pacific energy market as well as being involved in the US Gulf Coast LNG export plant build-out.

McDermott is also undertaking subsea umbilicals, risers and flowlines (URF) as part of an expansion of the existing Ichthys LNG facilities.

Engineering will be completed in McDermott's Asia-Pacific headquarters in Kuala Lumpur, Malaysia, and was already underway.

Inpex is operator of the onshore Ichthys plant at Bladin Point near Darwin in Australia’s Northern Territory.

The company also has a stake in Royal Dutch Shell’s Prelude FLNG project offshore northwest Australia, as well as the planned development of an onshore plant in Indonesia.

The Australian Ichthys plant came on stream in 2018 and produces almost 9 million tonnes per annum of LNG from two processing Trains.

Shares in Ichthys LNG held by Inpex amount to around 66 percent of equity, while French major Total has 26 percent.

Micro-stakes are additionally held by customers CPC Corp. of Taiwan and Japan’s main utilities and LNG buyers, JERA Co. Inc., Tokyo Gas, Osaka Gas, Kansai Electric and Toho Gas.

Royal Dutch Shell said its Prelude floating liquefied natural gas export plant off the coast of northwest Australia would not resume full production this year after being shut down in February 2020 because of safety issues.

UK major BP has issued the 69th edition of its Statistical Review of World Energy, highlighting emerging global energy trends such as the slowing of natural gas consumption growth from the previous year, prior to the current Covid-19 pandemic and the oil price crash.

Woodside Petroleum, the Western Australia operator of the North West Shelf and Pluto LNG plants, said it was keeping up production levels as demand has remained strong in its core north Asian market and its trading team has started trading spot shipments with Chinese buyers.

The Perth-based company said its base business was characterised by reliable, low-cost, high-margin operations which provide resilience to fluctuations in commodity prices.

“LNG and oil production have not reduced in the current environment, and deliveries to customers have continued,” said the company.

“Woodside has a high-quality, investment-grade customer base, and deliveries and performance under contracted arrangements have not been adversely impacted by recent events,” said Woodside.

It outlined its actions over the combined coronavirus and oil and LNG market gluts actions as being aimed at protecting local communities and the health and safety of its people and contractors while deferring some projects and spending.

“Demand has proven resilient for Woodside’s product in core north Asian markets. Woodside’s trading team has recently begun placing some spot production back into China as industrial output and demand restarts,” said Woodside.

“This trading capability, along with Woodside’s shipping capacity, provides flexibility to respond quickly to changes in market dynamics,” it added.

Woodside expected to see full impact of lower oil price late in the second quarter of 2020 due to the lag between the oil price and realised LNG price and was increasing hedging activities.

“The oil price is expected to be volatile at least in the near-term. To reduce exposure to potential further downside and increase revenue certainty, Woodside has hedged 11.85 million barrels of oil between April and December 2020 at an average price of US$33.47 per barrel,” said the company.

“Woodside has also agreed with a customer (unnamed) to fix the price of approximately 2.4 MMboe of LNG production over the same period, to further increase revenue certainty,” it added.

Because of the changed market and the drop in commodity prices and exchange rate issues, Woodside said its 2020 work plan had been reviewed and non-essential activities have been cancelled or deferred. 

“Total expenditure in 2020 is forecast to reduce by approximately 50 percent to approximately $2.4 billion,” said the company.

The company has delayed final investment decisions on the Scarborough and Pluto LNG Train 2 developments until 2021as will as target investments in the Browse Basin, offshore northwest Australia.

“Finalisation of commercial agreements and regulatory approvals will continue for Scarborough, Pluto Train 2 and Browse and there will be some ongoing engineering work in preparation for final investment decisions,” explained Woodside.

It also gave an update on its plans for the oil-led project offshore Senegal in West Africa.

“Work on the Sangomar Phase 1 development commenced early in 2020. Woodside is taking early action to proactively manage the emerging impacts of COVID-19 on the supply chain and project schedule,” said Woodside.

"We are working with contractors, the Government of Senegal and our joint venture partners to evaluate options to reduce total cost and near-term spend whilst protecting the overall value of the investment,” it added.

The company is also making efforts to maintain high production levels by deferring planned maintenance on natural gas facilities LNG Trains.

It made changes to the planned turnaround schedule at the Karratha Gas Plant with the major turnaround for LNG Train 3 deferred to September 2020 and the major turnaround for LNG Train 4 deferred to August 202.

Woodside has also delayed most proposed exploration activities, although some seismic acquisition will continue, reducing overall exploration expenditure by around 50 percent to $75 million.

On the hiring front. Woodside said employee numbers had been frozen but its intake of graduates would continue.

Australian liquefied natural gas production in the third quarter of 2019 represented an annualised rate of 79.5 million tonnes, keeping the nation in the No. 1 spot of global producer, ahead of Qatar's nameplate capacity of 77 MTPA.

Woodside Petroleum, the operator of two LNG export plants in Western Australia, said it had successfully completed additional work at its Pluto liquefaction facility following scheduled maintenance and production had restarted.