FLNG Market Update Stephen Gordon Clarksons

FLNG market update
Stephen Gordon
Managing Director, Clarksons
Offshore Overview and

FLNG
5th November 2013 Clarkson Research Services Limited
Presentation to Standard Club Offshore Forum,

Steve Gordon, Managing Director, Clarkson Research
5th November 2013
Offshore Overview / Standard Club
www.clarksons.com
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November 2013
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November 2013
Floating LNG / The Standard Club
www.clarksons.com
Update - FLNG
Agenda:
1.Offshore Overview
2.FLNG in the LNG logistics chain
3.FLNG Project Review
4.Summary
November 2013
www.clarksons.com
Paris, November 2013 | Standard Club
Offshore Energy Within the Global Context

20% of all energy
from offshore
30.5% of oil
produced
offshore
31% of gas
produced
offshore
November 2013
www.clarksons.com
World Offshore Producing Regions - Oil

Offshore Oil Production 2013 Forecasts
4. Europe
Offshore:2.9 m bpd
Growth: -5% pa
1. N. America
Offshore: 4.0 m bpd
Growth: 0.2% pa
2. S&C
America
Offshore:
2.8 m bpd
Growth:
2% pa
5. Med/ Caspian
Offshore: 2.1 m
bpd
Growth: 0.2% pa
3. West
Africa
Offshore:
4.2 m bpd
Growth:
3% pa
6. M East
& India
Offshore:
7.1 m bpd
Growth:
2% pa
7. Asia
Pacific
Offshore:
3.4 m bpd
Growth: 1%
pa
November 2013
www.clarksons.com
Offshore Oil Production & Forecast
Production fell between 2005 and

2010, but we expected growth to the
30m bpd level in the next five years.
South America, Middle East and West

Africa contribute the most absolute
growth.
North Sea & US Gulf steady or

declining but still important.
Stagnation
1998 - 2010
Growth
2010 - 2020
November 2013
www.clarksons.com
World Offshore Producing Regions - Gas

Offshore Gas Production 2013 Forecasts
4. Europe
Offshore: 17.7 bn cuf/d
Growth: -3%
1. N. America
Offshore: 8.8 bn cuf/d
2013 Growth: -9%
2. S&C
America
Offshore:
6.7 bn
cuf/d
Growth:
4%
5. Med/ Caspian
Offshore: 9.5 bn
cuf/d
Growth: 11%
3. West
Africa
Offshore:
2.8 bn
cuf/d
Growth:
6% pa
6. M East
& India
Offshore:
33.5 bn
cuf/d
Growth:
8% pa
7. Asia Pacific
Offshore: 22.8
bn cuf/d
Growth: 4%
November 2013
www.clarksons.com
Offshore Gas Production Forecast
November 2013
www.clarksons.com
Offshore Gas Discoveries by Depth

Historical Offshore Gas
Discoveries
3,500
Water Depth
(M)
3,000
Historical Offshore Oil

Discoveries
3,500
Water Depth (M)
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
1950
1960
1970
1980
1990
2000
2010
Source: Clarkson Research Services
1950
1960
1970
1980
1990
2000
2010
Both Gas and Oil discoveries have become more frequent in deeper water.
Medium-sized deep gas discoveries are more common than for oil bar a few Brazilian fields,
most fields are relatively smaller.
Several earlier gas discoveries in harsher environments are now more viable (technology
November 2013
developments, changing price conditions).
www.clarksons.com
Gas Prices
Global Natural Gas Prices ($/mm BTU)
Unlike oil, gas has yet to develop a

global commodity market.
Long-term LNG contract prices used to

be benchmarked to oil (this is still
common in Asia, dark blue line on
chart)
Shale gas has made US gas much

cheaper though. European supplies
have also become cheaper as more
LNG competes with Russian pipeline
gas.
If the latter case, then offshore

developments, including FLNG, could
become less attractive.
www.clarksons.com
2020/12 Change in Offshore Production

% Change in Offshore Production
-40%
-20%
0%
20%
% Change
40%
60%
80%
100%
120%
2012 gas
production
(bn cuf/d)
North America
8.8
South America
6.7
West Africa
2.8
NW Europe
17.7
Med/Caspian
9.5
Middle East/ISC
Asia Pacific
Global
33.5
Oil
Gas
22.8
101.9
Major Gas Growth Areas:

Asia-Pacific: Driven by large remote NW Australian field start-ups (Browse, Canarvon, Bonaparte basins)
East Africa: Recent deep discoveries off Mozambique and Tanzania
Mediterranean: Recent deep discoveries off Israel & Cyprus
Middle East: Further stages of project development in the South Pars/North Dome complex (risk: dependent on
Iran) 2013
November
www.clarksons.com
World Offshore Fleet

World Offshore Fleet as at September 1, 2013 (No of Units)
188 FPSO of
which none are
FLNG so far. 3
FLNG units are
on order (43
FPSOs on order
in total).
November 2013
www.clarksons.com
The LNG Logistics Chain
Production
Pipeline
Liquefaction
Floating LNG adds a

different option at this
point in the logistics chain.
Shipping
Terminalling &
Regasification
Distribution
A small number of
Floating Regasification
vessels (FSRUs) also
exist.
November 2013
www.clarksons.com
London, September 2013 | OFC Club
LNG Capacity by Regions
450
400
500
Mediterranean
Atlantic
450
Middle East
Asia/Pacific
400
LNG Regas Capacity
mtpa
Europe
North America
South America
Asia/Pacific
350
350
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2017
2016
0
2015
0
2014
50
2013
50
2012
100
2011
100
2010
150
2009
150
2008
200
2007
200
2006
250
2005
250
2006
300
300
2005
500
LNG Liquifaction Capacity
mtpa
Capacity of both floating and onshore terminals.
Future capacity expectation is based on terminals

currently under construction or with final investment
decision taken, so upside is possible.
www.clarksons.com
Potential Development of LNG Export Capacity

Development of Liquifaction Capacity: 2013-2021
1,000
900
800
700
mtpa
600
500
400
300
200
100
0
Total Existing Plants Under FEED Stage
Capacity
Construction
Plans
Proposed
Plans
Total
September 2013
www.clarksons.com
FLNG in the context of the wider LNG fleet

Fleet
Orderbook
0
<35k cbm LNG carriers
23
FSRU
15
345
107
FLNG
Conventional LNG >35k cbm
100
200
300
Vessels
400
500
November 2013
www.clarksons.com
Vessel Types
Floating LNG: Essentially a gas FPSO. The
majority of the units in the planning process so far
are intended as a means to enable the production
and export of gas from offshore fields which would
otherwise be non-viable : eg stranded gas fields
some distance from shore or established pipeline
infrastructure. Capital investment is large.
Floating Regasification Units: These are

offloading units, analogous to the trans-shipment
vessels which exist in bulk trades. Some units are
designed to retain more ability to move location,
thus serving countries like Kuwait where gas import
demand is seasonal. Others are more permenantly
moored as a solution to reduce the cost or space
issues of LNG Regas.
November 2013
www.clarksons.com
Future Floating LNG Vessels

40
35
Cumulative potential fleet size
Possible
CRSs projects database now has

records for 35 mooted FLNG
projects.
Only 3 are under construction so

far.
Not all of the potential MPU

projects shown on the left will
come to fruition.
However, FLNG looks like

becoming increasingly important.
There are currently only 91 landbased liquifaction terminals: so

floating LNG is becoming a
relatively large number.
Probable
30
Under Construction
25
20
15
10
5
0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Target Delivery Date

www.clarksons.com
Future FLNG Deployment

1
Unknown Region
2
2
22
November 2013
www.clarksons.com
Why FLNG?
Demand for natural gas is growing rapidly, particularly in Asia. Majority of

prospective FLNG projects are in the Asia/Pacific region.
LNG transport has an established track record in providing a logistical solution to

moving volumes over long distances.
Offshore gas fields are increasingly being discovered far from land, in deeper
environments and harsher and more difficult conditions.
In some situations FLNG can offer a cost effective solution to the question of
extracting and delivering such gas to market, rather than using an onshore solution.
November 2013
FLNG Projects - Under Construction

MPU Name
Field
Country
Build
Date
Distance from
Shore (km)
Operator
Kanowit FLNG-1
Kanowit
Malaysia
2015
162
Petronas Carigali
Exmar Pacific Rubiales FLNG Barge
La Cresciente
Colombia
2014
Shoreside
Exmar Offshore
Shell Prelude FLNG
Prelude
Australia
2016
197
Shell
The majority of under construction and proposed FLNG projects are means of rendering
exportable stranded gas fields far from existing infrastructure - hence most are a large
distance from shore.
November 2013
FLNG Projects Under Construction
Prelude FLNG
Worlds first FLNG Project.
Lead company Shell.
Total estimated CAPEX= $11.4bn.
Current status= EPC.
FID taken May 2011.
Production planned late 2016-early 2017.
FPSO-LNG facility with capacity of 5.3mtpa.
FPSO-LNG production system awarded to Technip Samsung Consortium in July 2012. Keel laid in May
2013.
Noble began drilling 7 wells in September 2013 using semi-sub drilling unit. Est. completion early-2015.
FMC Technologies awarded contract for 7 EVDT Trees in July 2012. Est. completion start-2014.
SBM Offshore awarded contract for 1 Turret (11,500t), worlds largest.

November 2013
Kanowit FLNG
Malaysias first FLNG project.
Current status= EPC
FID taken April 2012.
Production planned end-2015.
FPSO-LNG facility with capacity of 1.2mtpa.
FPSO-LNG production system awarded to Technip Daewoo Consortium in July 2012. Contract valued at
$2bn.
GE awarded contract for gas-turbine generator systems, 2 compressor units and 2 centrifugal
compressor modules. Units delivered August 2013.
Aker Solutions awarded contract for 2 Completion, 1 Manifold and 1 Pipeline End Manifold structures in
August 2010. Total cost $45m. Delivered to Daewoo in 2011.
November 2013
Pacific Rubiales (Exmar)
This Project is a shore-side Floating

Liquifaction Project.
Unlike the majority of other projects, it is not

intended to rescue a remote offshore gas
field.
Gas will be piped from the Colombian onshore

La Creciente field to a barge moored on the
Caribbean coast.
500,000 tpa export capacity.
Targeting short-haul exports of LNG to

Caribbean islands; i.e. Dominican Republic,
Puerto Rico.
Start up could be 2014, possibly making it a

first step in proving the technology.
However, the majority of FLNG applications

are likely to be offshore.
November 2013
Notable FLNG Projects Proposals
FLNG Projects-Probable
MPU Name
Field
Country
Build Date
Distance from
Shore (km)
Operator
Abadi FLNG
Abadi
Indonesia
2019
102
INPEX Masela
Bonaparte FLNG
Petrel
Australia
2018
100
GDF Suez Bonaparte
Browse FLNG 1 (Brecknock)

Browse FLNG 2 (Calliance)
Brecknock
Calliance
Australia
Australia
2017
2018
259
247
Woodside Energy
Woodside Energy
Browse FLNG 3 (Torosa)
Torosa
Australia
2019
285
Woodside Energy
Cash Maple/Oliver FLNG
Cash-Maple
Australia
2019
265
PTTEP Australia
Chaza/Jodari/Mzia FLNG
Mzia
Tanzania
2018
39
BG Group
Golar FLNG
Unknown
Angola
2018
Malaysia Rotan Petronas FLNG
Rotan
Malaysia
2017
PNG Petromin FLNG

Sankofa/Gye Nyame FLNG
Unknown
Sankofa
Papua N. Guinea
Ghana
Scarborough FLNG
Scarborough
Tamar Israel FLNG
Tamar
Golar LNG
101
Petronas Carigali
2017
2019
53
Petromin PNG
ENI Ghana
Australia
2021
236
Esso Australia
Israel
2017
94
Noble Energy
November 2013
FLNG Projects-Possible
MPU Name
Field
Country
Build Date
Distance from
Shore (km)
Operator
Acme FLNG
Acme
Australia
2017
83
Chevron Australia
Arnhem/Pinhoe FLNG
Arnhem
Australia
2019
290
Chevron WA-364-P
Bilabri/Orobiri FLNG
Bilabri
Nigeria
2019
48
Peak Petroleum
Block 22/NCMA 4 (Trinidad) FLNG
Unknown
Trinidad
2017
Caldita/Barossa FLNG
Barossa
Australia
2017
Cambridge Energy FLNG
Unknown
United States
2016
Echuca Shoals FLNG
Echuca Shoals
Australia
2019
174
Nexus WA377P
Elk/Antelope FLNG
Elk/Antelope
Papua N. Guinea
2016
InterOil Corp
Greater Chuditch FLNG
Chuditch
Greater
Sunrise
Greater
Sunrise
Aust-East Timor JDZ
2019
246
Minza
Australia
2020
306
Woodside Energy
Australia
2022
306
Woodside Energy
Hyundai/Linde FLNG
Lavani/Zafarani/Tangawizi (Block 2)
FLNG
Unknown
Unknown
2016
Lavani
Tanzania
2019
Myra/Sarah FLNG
Unknown
Israel
2015
ILDC
Octopus8 FLNG
Unknown
Unknown
2020
Bluesky FLNG
Pechora FLNG
Unknown
Russia
2018
Pechora LNG
Pelican/Faucon FLNG
Faucon
Mauritania
2020
Petrobras FLNG
Lula
Brazil
2018
Shtokman FLNG
Shtokman
Russia
2020
Greater Sunrise FLNG 1

Greater Sunrise FLNG 2
Centrica
157
Conoco Australia
Cambridge Energy
Unknown
78
210
Statoil
Dana Petroleum
Petrobras
283
Shtokman Development
November 2013
Kanowit
Abadi
Prelude
Scarborough
November 2013
Scarborough/Thebe FLNG
Located 280km offshore Australia.
Lead company Exxon Mobil.
Total estimated CAPEX=$20bn
Current status=pre-FEED.
FID delayed to 2014-2015 due to engineering
studies.
Project scheduled to utilise an FPSO-LNG vessel with a 6-7m tpa capacity.
Major challenges include the size of the turret and the cryogenic hoses for LNG offtake.
Despite difficulties, FID still likely.
12 wells are expected to be drilled in 2 phases.
November 2013
Abadi FLNG
Located in the Arafura Sea.
Lead company Inpex.
Current status=FEED.
Total estimated CAPEX=$20bn.
FLNG production scheduled to start in 2019.
Dual FEED for FPSO-LNG awarded to JGC Indonesia and Saipem Indonesia in January 2013.
Initial capacity estimate of 4.5mtpa, revised down to 2.5mtpa.
Contract for EPC on FPSO-LNG to be awarded by early-2014.
18 production wells from 5 semi-submersible drilling centres are planned.
November 2013
Tamar FLNG- off Israel

Lead company Noble Energy
Current status=FEED.
Total estimated CAPEX=$10bn.
Daewoo Shipbuilding likely to be awarded contract to build FPSO-LNG vessel, with a capacity of
3.4mtpa.
FLNG production scheduled to start in 2018.
Pre-FEED stage completed in November 2012. Vessel to be owned and operated by Hoegh LNG.
20 year sales agreement with Gazprom.
November 2013
Mediterranean Offshore
Po Basin
Adriatic
Basin
Pelagian Basin
Levantine Basin:
Leviathan, Tamar,
Aphrodite potential
FLNG prospects
Nile Delta
www.clarksons.com
East Africa Offshore

Potential Tanzania FLNG: two
potential sites for an FLNG terminal
have been mooted (Mzia, Lavani
fields). Tanzanian Government
decisions may impact, and onshore
LNG may be initial export solution.
Potential Mozambique
FLNG: Again, onshore likely to
be an initial solution to exports,
but FLNG proposals have also
been discussed (likely to be mid2020s at earliest).
www.clarksons.com
FLNG Summary
Offshore production is expected to grow significantly during the next decade.
Offshore Gas production is likely to be the major element of this, growing at c. 4% p.a. over the next
decade (offshore oil is expected to grow at c. 2% p.a).
FLNG represents a highly complex engineering commitment in remote and sometimes hostile
conditions.
In an atmosphere of strong demand growth, FLNG provides a potentially cost-effective solution to

deep-sea gas extraction.
There are 3 FLNG under construction, 13 which we rate as probable and a further 19 possible
projects.
Risks (1): FLNG is an unproven technology any issues with the start-up of the first units in service
could impact how widespread the technology becomes.
Risks (2): Commodity prices. If US regulators allow large-scale exports of shale gas, then if this
were to produce downward pressure on prices, FLNG could become less attractive.
Risks (3): Delays, postponement or cancellation of projects are a feature of the industry, given the
resource constraints, technical challenges and high CAPEX involved.
November 2013
The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the
Company and its employees cannot accept liability for loss suffered in consequence of reliance on the
information provided. Provision of this data does not obviate the need to make further appropriate enquiries
and inspections. The information is for the use of the recipient only and is not to be used in any document for
the purposes of raising finance without the written permission of Clarkson Research Services Limited.
The statistical and graphical information contained herein is drawn from the Clarkson Research Services
Limited ("CRSL") database and other sources. CRSL has advised that: (i) some information in CRSL's
database is derived from estimates or subjective judgments; and (ii) the information in the databases of other
maritime data collection agencies may differ from the information in CRSL's database; and (iii) whilst CRSL
has taken reasonable care in the compilation of the statistical and graphical information and believes it to be
accurate and correct, data compilation is subject to limited audit and validation procedures and may
accordingly contain errors; and (iv) CRSL, its agents, officers and employees do not accept liability for any loss
suffered in consequence of reliance on such information or in any other manner; and (v) the provision of such
information does not obviate any need to make appropriate further enquiries; (vi) the provision of such
information is not an endorsement of any commercial policies and/or any conclusions by CRSL; and (vii)
shipping is a variable and cyclical business and any forecasting concerning it cannot be very accurate.
www.clarksons.com

FLNG Market Update Stephen Gordon Clarksons

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FLNG Market Update Stephen Gordon Clarksons

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FLNG market update

Offshore Overview and

Presentation to Standard Club Offshore Forum,

Offshore Overview / Standard Club

Clarksons shipbroking services

From derivative products that have

Clarkson Port Services provides

Up-to-the-minute intelligence is the

Floating LNG / The Standard Club

The leading provider of data to the offshore

The worlds leading provider of valuations to the

Shipping and trade

Floating LNG / The Standard Club

Paris, November 2013 | Standard Club

Offshore Energy Within the Global Context

Paris, November 2013 | Standard Club

World Offshore Producing Regions - Oil

Paris, November 2013 | Standard Club

Offshore Oil Production & Forecast

Production fell between 2005 and

South America, Middle East and West

North Sea & US Gulf steady or

Paris, November 2013 | Standard Club

World Offshore Producing Regions - Gas

Paris, November 2013 | Standard Club

Offshore Gas Production Forecast

Paris, November 2013 | Standard Club

Offshore Gas Discoveries by Depth

Historical Offshore Oil

Water Depth (M)

Source: Clarkson Research Services

Source: Clarkson Research Services

Paris, November 2013 | Standard Club

Unlike oil, gas has yet to develop a

Long-term LNG contract prices used to

Shale gas has made US gas much

If the latter case, then offshore

Paris, November 2013 | Standard Club

2020/12 Change in Offshore Production

Major Gas Growth Areas:

Paris, November 2013 | Standard Club

World Offshore Fleet

Paris, November 2013 | Standard Club

The LNG Logistics Chain

Floating LNG adds a

London, September 2013 | OFC Club

LNG Capacity by Regions

LNG Regas Capacity

Source: Clarkson Research Services

LNG Liquifaction Capacity

Source: Clarkson Research Services

Capacity of both floating and onshore terminals.

Future capacity expectation is based on terminals

Paris, November 2013 | Standard Club

Potential Development of LNG Export Capacity

Paris, November 2013 | Standard Club

FLNG in the context of the wider LNG fleet

<35k cbm LNG carriers

Conventional LNG >35k cbm

Paris, November 2013 | Standard Club

Floating Regasification Units: These are

Paris, November 2013 | Standard Club