Basin review, Bonaparte Basin, LNG, Markets, Offshore, Projects

Feeding global gas demand: LNG production in the Top End and beyond

In the waters between Australia’s Top End and its island neighbours, and in the jungles of Papua New Guinea, are gas fields holding vast resources. A number of different companies are proposing to develop LNG projects to commercialise these prospects, however the way in which these resources will be processed and liquefied varies dramatically.

While Inpex will be transporting gas from its Ichthys Field to shore via an 885 km pipeline, Flex LNG, PTTEP Australasia, Woodside and GDF Bonaparte are looking to use floating LNG (FLNG) technology to develop their gas resources.

Meanwhile, MEO Australia has chosen a self-elevating platform to hosts its LNG facility in the shallow waters of Tassie Shoal.

Gas Today has reviewed major projects in the top end, outlining development options as chosen by proponents, and provides a status update of the projects so far as well as the opportunities that exist for contractors.

PTTEP FLNG

PTTEP Australasia plans to develop a FLNG facility in the Timor Sea, 680 km west of Darwin.

The FLNG facility and associated infrastructure will produce gas from three groups of fields that are within three permit areas. The three permit areas are located in the eastern region of the Territory’s Ashmore and Cartier Islands offshore area, and consist of the Cash-Maple field (AC/RL7), Southern group of fields (AC/L7) and Oliver field (AC/P33). PTTEP is the owner and operator of all fields.

The company anticipates that five production wells will be required across the Southern group of fields, three wells in the Oliver field and between 3 to 13 wells in the Cash-Maple field.

Greater Sunrise

In accordance with international treaties, Woodside is continuing to advocate for the approval of its proposed FLNG development with Australian and Timor-Leste governments for its Greater Sunrise and Troubadour gas fields, located in the Timor Sea, approximately 450 km northwest of Darwin and 150 km south of Timor-Leste.

The FLNG facility would be based on Shell’s FLNG design and would be constructed by Samsung Heavy Industries. The Sunrise floating facility will be approximately 480 m in length and 75 m wide. It will be designed to produce around 4 million tonnes per annum (MMt/a) of LNG and condensate for export. The facility will be permanently moored via a geostationary turret, held on station via mooring chains.

The Sunrise subsea facilities will include approximately 26 production wells and a number of main flow line headers linking into the FLNG facility.

The FLNG facility, which will store and export LNG via a LNG carrier and condensate via a shuttle tanker, will:

“¢ Be located in water depths of approximately 180-400 m;

“¢ Store 210,000 cubic metres of LNG and 126,000 cubic metres of condensate;

“¢ Treat the gas stream by removing carbon dioxide (CO2), hydrogen sulphide and mercury;

“¢ Vent reservoir CO2 to atmosphere following removal from the production stream (with the capability for CO2 compression, dehydration and geosequestration); and,

“¢ Remove, treat and dispose of produced water.

The joint venture partners are planning to commence front-end engineering and design (FEED) in 2012 and construction in 2013, ahead of first LNG production in 2017.

Development is contingent on the project receiving legal, regulatory, and fiscal certainty for the Timor-Leste and Australian governments.

Bonaparte LNG

A joint venture between GDF SUEZ and Santos is planning to develop the offshore Petrel,Tern and Frigate gas fields using FLNG technology to produce 2 MMt/a of LNG.

The offshore Petrel Gas Field, discovered in 1969, is located about 250 km west of Darwin on the Western Australia-Northern Territory seabed border in the Bonaparte Basin. The Tern Gas Field, discovered in 1971, is located about 300 km west of Darwin in Western Australian waters in the Bonaparte Basin.

Bonaparte LNG is in the pre-FEED phase for both the upstream and midstream aspects of the project. The midstream contract, which includes the LNG floating production, storage and offloading (FPSO) facility, was awarded to Doris Engineering, while the upstream contract was awarded to KBR-subsidiary Granherne and involves wells, flowlines, subsea equipment and potentially a wellhead/pre-treatment platform. These contracts were announced in January 2011.

An appraisal drilling program of the Petrel field is scheduled to get underway in July/August 2011.

The final investment decision (FID) for the project is expected in 2014, with LNG production scheduled to start in 2018.

Tassie Shoal

MEO Australia has proposed the Tassie Shoal project, which involves the development of two separate methanol plants and an LNG plant which will be grounded in shallow water at Tassie Shoal in the Australian waters of the Timor Sea, approximately 275 km north of Darwin.

Tassie Shoal lies in close proximity to NT/P68, from which gas will be sourced. In March 2011, MEO announced that it had conditionally accepted a farmin offer for the permit.

When completed, each methanol plant will convert 61 petajoules (PJ) of high CO2 natural gas into 1.75 MMt/a of methanol, and the LNG plant will liquefy approximately 175 PJ/a of natural gas into more than 3 MMt/a of LNG to supply export markets.

The total cost of the projects will be approximately $A4.5 billion, which MEO states is a lower cost than landbased processing due to pipeline savings and single “˜module’ construction.

Uniquely, the methanol plants can work together to lock the C02 in the feed gas into the produced methanol which, when used for the manufacture of resins and fibreboards, locks the carbon away as an alternative to underground storage. Approximately 25 trillion cubic feet (Tcf) of undeveloped gas, much of it with a high CO2 content, lies within 150 km of Tassie Shoal.

The projects represent a more cost-effective way of commercialising these gas resources than other alternatives under consideration.

It is anticipated that construction will begin on the project in 2013 and be complete by 2016.

Ichthys

In September 2008, Inpex Browse Ltd selected Darwin as the preferred location for its Ichthys LNG onshore facilities. The Ichthys Project is designed to commercialise an estimated 12.8 Tcf
of gas from the Ichthys Gas Field located in Western Australia’s Browse Basin.

Gas from the Ichthys Field will undergo preliminary processing at the offshore central processing facility (CPF) to remove water and raw liquids, including a large proportion of the condensate. This condensate will be pumped to a FPSO facility anchored nearby, from which it will be transferred to tankers for delivery to markets.

The gas will be transported from the CPF through a subsea pipeline more than 885 km to the onshore LNG processing plant proposed for Blaydin Point on Middle Arm Peninsula, Darwin, Northern Territory.

The Ichthys project will have an initial capacity to produce 8.4 MMt/a of LNG and approximately 1.6 MMt/a of liquefied petroleum gas (LPG), as well as 100,000 barrels of condensate per day at peak.

The project is currently in the FEED phase. Onshore FEED work for the project is being undertaken by the JKC Joint Venture, comprising JGC Corporation, KBR and Chiyoda Corporation. The contract involves the design of the proposed onshore LNG
processing facility at Blaydin Point and associated infrastructure.

Offshore FEED work for the Ichthys project is being undertaken by AMEC Engineering as the lead contractor with support from subcontractors Aker Solutions and JP Kenny.

The offshore FEED contract involves engineering work for the:

“¢ Semi-submersible CPF;

“¢ FPSO unit for condensate treatment and storage;

“¢ Umbilicals, risers and flowlines; and,

“¢ export pipeline to Darwin.

Both offshore and onshore FEED are expected to take more than a year to complete.

FLEX LNG

Recently Flex announced the signing of its first binding deal with Interoil Corporation (IOC) and Liquid Niugini Gas for the supply of a Flex LNG Producer (LNGP) into Papua New Guinea (PNG). Originally the company’s vision was that an LNGP would operate as a typical FPSO in monetising offshore stranded gas, however the PNG project involves liquefaction of gas from the Elk/Antelope onshore field.

The LNGP is part of a larger project that involves a condensate recovery plant and then the piping of gas to the Gulf of Papua; there it is intended there will be an onshore plant as train 1 and the Flex LNGP as train 2 of a gas liquefaction complex. Both trains will deliver LNG to a jetty head for loading on to LNG carriers.

The Flex solution was chosen for PNG for two reasons. First, it is a fast-track solution because the LNGP is already subject to a firm ship-building contract with Samsung Heavy Industries and could be producing LNG by the end of 2014 with a contract running for 25 years. That would make it the first ever floating LNG production in the world and the first LNG production from PNG.

Second, the Flex solution has a significantly lower capex both in absolute terms and per tonne of annual capacity than a landbased plant. Moreover because the vessel will be alongside a jetty, there is further scope to reduce capex by deleting significant items of equipment including propulsion, navigation equipment, helideck and some accommodation. It is planned the vessel will retain its own electricity production.

The parties are currently undertaking a comprehensive FEED study and the plan is to take a FID by the end of 2011. There are significant challenges in working in the PNG environment including the building of a gas pipeline across difficult terrain, obtaining government approvals to a novel project, the lack of a skilled workforce in the area and achieving enduring agreements with local landowners.

Some of these difficulties are avoided by the LNGP being constructed totally in Korea and being positioned offshore. Thus there is little need for local skilled labour during construction of the LNGP and there is no onshore footprint for the LNG production or storage for train 2. Another unique feature of this project is that FLEX will be remunerated for liquefying gas by being paid a percentage of the revenue from LNG sales.

The LNGP is fully financed by Samsung and Flex until sail-away from the shipyard. The ship-building contract signed with Samsung covers engineering, procurement, construction, integration and commissioning of the hull and topside facilities, meaning there is a single point of responsibility.

Looking ahead

The above projects are not without their challenges as the skills shortage inevitably inflates project costs and remote and isolated areas prove difficult to navigate and develop. However the Northern Territory/Timor region finds itself in an exciting position with a number of projects set to provide the region with economic prosperity and its inherent flow-on effects within the wider community. The development of FLNG projects also positions the region as an area of innovation and will no doubt draw many talented professionals to its operations in order to be a part of, and benefit from, working with cutting-edge technology

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