LNG

McDermott International, the US energy and LNG engineering company, has successfully completed the sail away of the Tyra East gas processing module for the Tyra Redevelopment Project, a crucial part of Denmark's natural gas production hub.

Chiyoda Corp., the Japanese LNG engineering company, said it was still working on its recovery plan from the more than $1 billion of losses incurred from significantly increased project construction costs, particularly at the Cameron project in Louisiana being built by Sempra Energy.

McDermott International and Baker Hughes-GE, the US energy services companies, have been awarded substantial subsea contracts by BP to develop the Greater Tortue-Ahmeyim natural gas fields that will underpin several floating LNG projects offshore Mauritania and Senegal.

The initial subsea infrastructure supplied will connect the first four of 12 wells consolidated through production pipelines leading to a floating production, storage, and offloading (FPSO) vessel.

From here liquids are removed and the export gas is transported via a pipeline to the FLNG production hulls where the gas is liquefied.

McDermott defines a substantial contract as between $500 million and $750M. The contract award will be reflected in McDermott's first-quarter 2019 backlog.

McDermott and BH-GE said the contract follows an initial front-end engineering and design (FEED) phase awarded in March 2018 when both companies worked together to define the technology and equipment scope for a four-well development phase.

Project management and engineering teams from BP, BHGE and McDermott will remain co-located at McDermott's London offices for this next phase.

McDermott and BH-GE will supply subsea umbilicals, risers and flowlines (SURF) and subsea production systems (SPS) equipment.

McDermott said it planned to use its upgraded “Amazon” vessel, “DLV 2000”, “North Ocean 101” and third-party vessels to support the installation scheduled to begin in late 2020.

“The ‘Amazon’ modifications are scheduled to be completed before the installation campaign begins and will include a multi-joint (hex) J-Lay system to handle the most challenging ultra-deepwater projects as well as the addition of a multi-joint facility, dual pipe loading cranes and additional power generation,” explained McDermott.

McDermott-designed pipeline and riser structures will be fabricated at its yard in Batam, Indonesia.

BH-GE will provide five large-bore deepwater horizonal xmas trees (DHXTs), a 6-slot dual bore manifold, a pipeline end manifold, subsea distribution units (SDUs), three subsea isolation valves (SSIVs), diverless connections and subsea production control systems, specifically designed to enable the future integration of additional wells for the first phase of the development.

“This contract marks a number of firsts. Our first significant subsea EPCI project in West Africa, the first project using our state of the art pipelay vessel ‘Amazon’ and our support of BP's first entry into Senegal and Mauritania,” said Tareq Kawash, McDermott's Senior Vice President in the region.

“Our collaboration with BH-GE allows us to offer BP an integrated approach that builds on our proven solutions. We look forward, along with BHGE, to delivering this landmark project to BP with the highest levels of safety and quality,” stated Kawash.

Graham Gillies, BH-GE's Vice President for Subsea Production Systems, said the company aimed to deliver the best-in-class solution to BP with cost-efficiency and industry-leading safety.

“This major deepwater gas development is strategically important for Mauritania and Senegal's domestic and global gas supply, and supports the industry's drive for a more sustainable, lower carbon future,” added Gilles.

BH-GE has also signed an agreement to become a “Country Partner” of “Invest in Africa's (IIA) Senegal chapter”, of which BP is a founding member.

The IIA helps local suppliers to connect with international oil and gas companies, increasing the opportunities for local businesses to support large-scale projects, and training African suppliers on core business skills and entrepreneurship.

McDermott International, the energy and LNG engineering company, posted fourth-quarter earnings seriously impacted by $2.2 billion in charges and other items related to the Cameron LNG and Freeport LNG projects in Louisiana and Texas and the Calpine gas-fired power venture in Pennsylvania.

Chiyoda Corp., the Japanese engineering company with seven large-scale recent, current and future liquefaction contracts, has posted operational losses related to several LNG projects, including the Cameron LNG export plant in Louisiana being constructed in a joint venture with US firm McDermott International.

McDermott issued a statement after Chiyoda outlined losses on Cameron LNG and the Tangguh project in Indonesia.

McDermott said it would also be taking a hit on the Cameron engineering contract joint venture.

“Losses are mainly due to an increase in incremental construction costs for the Cameron LNG project,” said Chiyoda in its fiscal third-quarter earnings report.

In the financial results, Chiyoda posted an operating loss in the third fiscal quarter of 107.79 billion yen ($972 million), due to “significantly increased construction costs for ongoing LNG projects” and cited the Cameron LNG project of Sempra Energy and the Tangguh LNG expansion in Indonesia being built for operator BP of the UK.

Chiyoda, McDermott and the US Zachry Group have additionally just been awarded an engineering, procurement and construction contract for the Golden Pass  export plant in Texas by Qatar Petroleum and ExxonMobil. 

“The company expects a deterioration of cash flow and new financing may be required early in the next fiscal year,” stated Chiyoda.

“Under this circumstance, the company recognizes that events and conditions may cause substantial doubts about its ability to continue as a going concern,” stated Chiyoda.

“In addition, Chiyoda is implementing countermeasures to reduce costs, obtaining change orders, reviewing settlement conditions from ongoing projects including the Cameron LNG project, as well as making efforts to improve its cash flow,” said the Japanese company.

One of Chiyoda’s main shareholders is the trading house, Mitsubishi Corp.

Chiyoda has also been involved in several other LNG projects, including Ichthys LNG in Australia for Inpex Corp. and its partners and the Yamal LNG venture in Russia for Novatek, Total and Chinese stakeholders.

“Furthermore the company has been actively involved in front-end engineering and design work (FEED) for the Qatar expansion project, and FEED and engineering, procurement and construction (EPC) proposal preparation work for Nigeria LNG Train 7,” explained Chiyoda.

Chiyoda’s partner in Cameron LNG, McDermott, said it would be posting a fourth-quarter charge estimated at around $168M.

“The charge is due to unfavorable labor productivity, and increases in subcontract, commissioning and construction management costs,” said the US company.

McDermott noted that the Cameron LNG project, currently under construction in Hackberry, in Louisiana, was a world-scale facility incorporating proven technology and designed to produce nearly 14 million tonnes per annum of LNG.

“Operationally, the project is on track to reach a major milestone with feed-gas being introduced into the facility later this quarter,” said McDermott.

“Construction continues to progress well. The gas turbine solo run was completed ahead of schedule, cold circulation of hot oil in Train 1 was completed during the quarter and flare ignition testing was successfully completed on all flares,” added the US company.

“All of these are crucial steps in the commissioning of Train 1,” stated McDermott in its Cameron project update.

McDermott said it expected to report its fourth-quarter results on February 25 with the charge included.