An artist's impression of Shell's LNG processing ship planned for Australia
Floating Liquified Natural Gas (“FLNG”) is gaining momentum with the recent agreement by Teekay Corp. and Merrill Lynch Commodities Inc. to work on the development of a FLNG facility in British Columbia, Canada representing yet another large scale investment project in the Province’s natural gas industry.
The plan is to convert the SS Arctic Spirit into a FLNG plant to be moored near Kitimat, BC. A number of recent FLNG projects have been coming to fruition with a number of key benefits. Mainly time to market. Where a onshore LNG plant can take up to 10 years to develop, an FLNG facility can take 3 to 4 years. Calgary- based Kitimat LNG Inc. has already advanced plans for a land based LNG export facility located in Kitimat, BC, and has signed multi-billion dollar MOUs with both natural gas suppliers and buyers – most notably Korgas and Gas Natural which have both agreed to long term purchasing agreements with an equity option in the deal. The Teekay FLNG facility would be approximately 3 kms south of the Kitimat LNG facility and connected to different pipelines and would “not be competitors” according to a Teekay spokesperson.
Earlier in the year, Royal Dutch Shell PLC unveiled plans to build the world’s biggest ship – a 480m vessel that will house world’s first operational floating liquefied natural gas platform (See HRN: Shell’s $5 Billion floating LNG Platform). Shell is very interested in FLNG as part of their global strategic planning. Kathleen Eisbrenner, EVP for Global LNG at Shell is quoted as stating:
“We’re very optimistic that costs are going to be realistic and reasonable in the current environment, conpetitive to land-based LNG alternatives and open up a whole new realm of possibilities for LNG supplies.”
All indications seem to indicate that the long term production from BC’s Horn River basin could support both the Kitimat LNG, and Teekay LFNG facility. Natural gas is slowly but surely being recognized globally as a strategic long term energy source with a lower carbon strategy. Canada is in the fortunate position to not only increase and leverage natural gas resources domestically as part of an overall strategy to reduce carbon emissions, but still be left with a surplus to export to other energy hungry countries in Asia and worldwide.
In January 2010, industy players will attend the Global Floating LNG Summit in London, UK to discuss the challenges, opportunities and latest technology in floating LNG.
