LNG

Our Asia-Pacific editor

Pakistan's first liquefied natural import facility in Port Qasim, located on a channel of the Indus River east of the city of Karachi, has regasified around 1 million tonnes of shipments during its first nine months of operation and up to four other facilities would be needed just to keep pace with demand.

Malaysian energy company Petronas said it had reached the 95 percent completion point with the world's first floating liquefied natural gas production hull that will be deployed over the Kanowit field, located 180 kilometres offshore Sarawak, Malaysia, in late 2016.

Our North America editor

The US Delfin floating LNG export project offshore Louisiana is making some progress with regulators assessing the scope of the environmental review, including the onshore pipeline portion of the venture.

Delfin is a proposed deepwater port and floating LNG facility that will be located about 50 miles off the coastline of Cameron Parish, Louisiana.

Deepwater port

The company has applied to the United States Maritime Administration (MARAD) and the US Coast Guard for authorization to construct and operate a deepwater port capable of exporting 443.3 billion standard cubic feet of natural gas, equivalent to 9 million tonnes per annum of LNG.

The Federal Energy Regulatory Commission is also involved because of the onshore pipeline permit process.

Delfin proposes to activate the formerly abandoned U-T offshore system pipeline and construct new connecting pipelines, a compressor station and associated facilities.

Delfin told the FDERC that the majority of the onshore facilities would be within the Cameron Meadows Gas Plant and adjacent Transcontinental Gas Pipe Line (Transco) Station 44 in Cameron Parish.

The LNG export plant developers have also signed a joint development agreements with European project specialist Hoegh LNG of Norway and US pipeline company Enbridge in relation to the project.

Engineering company Bechtel was selected to perform front-end engineering and design for the venture.

Delfin LNG is a wholly-owned subsidiary of Fairwood Peninsula Energy Corp.

While MARAD and the FERC are involved, the Coast Guard is the lead federal agency preparing the Environmental Impact Statement (EIS) for the overall Delfin LNG Deepwater Port Project.

It has also been noted by Delfin that because the US Gulf of Mexico is prone to hurricanes almost every year, the developers will be able to disconnect the LNG hull from the port facility and move to protected waters during a hurricane.

"When a draft EIS is complete and ready for public review, the Maritime Administration will publish a Notice of Availability in the Federal Register to provide for a public comment period that includes public meetings in Louisiana and Texas," the FERC said.

"FERC, as a cooperating agency will play an important role in developing the environmental analysis for the FERC-jurisdictional (onshore) facilities in the EIS.

"Thus, FERC staff will work with Coast Guard staff and contractors to ensure that the onshore facilities are thoroughly evaluated and that all scoping comments received as a result of this notice are addressed in the EIS," the regulator stated.

The Canadian province of British Columbia, with about a dozen large-scale liquefied natural gas export projects still in the planning stage, has brought into force tougher greenhouse gas regulations targeting liquefaction plants.

The US Department of Energy has released a new study on the macroeconomic impacts of the nation's liquefied natural gas export plans involving at least 20 projects.

Japan's largest liquefied natural gas importers Tokyo Electric Power and Chubu Electric said they would integrate their LNG and several other businesses into their Jera Co. Inc. joint venture in July 2016, though would wait until 2017 to decide on any integration of their domestic power generation divisions under the Japanese liberalization programme.

Our Europe editor

UK liquefied natural gas supplier Flogas has taken part in the country's largest ever LNG conversion project for a manufacturing company.

Our Europe editor

Ophir Energy of the UK said it had signed six preliminary agreements for the sale of cargoes from its Fortuna Floating LNG project offshore Equatorial Guinea in West Africa.

The London-based exploration and production company had earlier shortlisted a group of counterparties for the sales. It described the companies as established LNG buyers in European and Asian markets, though declined to say who they were.

Offtake

Ophir and the unnamed parties have now signed six Heads of Agreements for the offtake from Fortuna FLNG project, with several of them giving the UK company a share of profits from cargoes diverted and sold into higher-priced markets.

Another element contained in some of the accords is pre-payment by the buyers for some of the cargoes during the early years of the project. Ophir is selling 2.2 million tonnes per annum of LNG, though the total demand requested under the HoAs has seen the offtake sold several times over. "The HoAs are based on a variety of different pricing constructs with formulae that consist of either European gas market netbacks, oil indexation or a combination of both and that in some cases includes the provision of a floor price,” Ophir said.

“Offtake under several of the HoAs also incorporates a sharing of incremental diversion income earned above the base contract formula for LNG volumes that are subsequently sold into higher value markets,” the UK company explained.

In addition, the UK company said it now estimated that the gross capital expenditure required to be spent before first gas was produced had been revised downwards from $800 million to $600M, based on recent input from the ongoing upstream front-end engineering and design work.

The midstream Fortuna FLNG partner is Norwegian LNG carrier owner and specialist floating project company, Golar LNG.

Golar has already signed an agreement to provide the former LNG carrier "Gimi" as a liquefaction hull to be placed over the Fortuna gas field offshore.

The Norwegian firm with its partners Keppel Shipyard of Singapore and Kansas-based US liquefaction process equipment company Black & Veatch decided on the "Gimi" FLNG conversion in December 2014.

Ophir recently announced an increase in forecast feed-gas reserves. Gross contingent resources on Block R are estimated at 2.6 trillion cubic feet to 3.0 Tcf.

Ophir Chief Executive Nick Cooper said the Fortuna FLNG project continued to move forward on schedule with the now formal signing of all the HoAs for offtake with a core group of LNG buyers.

“Each offtaker’s proposal offers something different, thereby providing Ophir with a range of pricing formulae and differing commodity risk profiles which will be helpful when we narrow down the short list in the first quarter of 2016,” Cooper explained.

“We are also pleased to report that the estimated cost to first gas has been reduced by a further 25 percent during FEED,” he said.

As well as pricing structure, Ophir has secured additional elements to its LNG offtake HoAs that are “significant for the development” of the project.

These include the offer to pre-pay for LNG volumes "in substantial quantities" over the early years of production by the Fortuna FLNG hull.

The company said the funds received from pre-payments could cover 30 percent to 50 percent of Ophir’s total net cost to first gas and could therefore be a major contributor towards funding of the project.

Pre-payment

“This cost reduction, plus the offered LNG pre-payment mechanisms materially reduce the amount required to fund Ophir’s portion of the project ahead of the Final Investment Decision in mid-2016,” the CEO added.

“The Upstream FEED process is presently about 50 percent complete and as a result management is able to refine and reduce the remaining upstream cost to first gas.

“The project has been able to capitalise on the deflationary cost environment and has been redesigned to increase standardisation of components wherever possible,” Ophir said.

Veresen Chief Executive Don Althoff said his company's Jordan Cove LNG export project in the northwest US state of Oregon was still on course for a final investment decision in the second half of 2016 and listed the main reasons why the venture would go ahead.

LNG Ltd, the Australian export project company with two North American liquefaction plants under development, has named a new board member whose qualifications include being the second longest-serving Commissioner in the history of the US Federal Energy Regulatory Commission.