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FLNG option on table for Nexus Crux gasfield

Nexus Energy and Shell have mooted the possibility of an FLNG project off Western Australia

Nexus Energy and Anglo-Dutch supermajor Shell have mooted the possibility of a separate floating liquefied natural gas (FLNG) project off Western Australia as the pair explore further options for Nexus’ Crux gasfield.

The scope of the deal has been expanded from an earlier heads of agreement signed with Shell and Japanese outfit Osaka Gas in January, covering the Shell-led Prelude FLNG backfill development option.

Nexus could now receive earlier returns from its asset in the Browse basin. The new agreement includes an earlier stand-alone FLNG development and integrated gas liquids recycle project, followed by backfill to Prelude.

A deal is expected to be struck by the end of June, when a new venture will be forged for licence AC/L9, which will see Shell take an 80% operating stake, with Nexus on 17% and Osaka Gas on 3%.

One of the main concerns for Nexus’ investors was that the original agreement only envisaged production start-up at Crux once supplies fell off from Shell’s Prelude and Concerto fields. This was expected after 2020.

The potential benefits of the new option under consideration, other than earlier cash flows, is the possibility of a second FLNG project in the Browse basin, opening up an option to develop other stranded fields nearby.

Individually, neither Prelude nor Crux has ample gas supplies for a stand-alone FLNG development. But other undeveloped fields do, such as PTTEP’s Cash-Maple, as well as some of Nexus’ exploration prospects.

Thai oil company PTTEP had been planning its own FLNG scheme at Cash-Maple, but earlier this month said it is considering processing its gas at a third-party LNG project.

Shell’s huge 3.6 million tonne per year (t/y) Prelude scheme was the world’s first FLNG liquefaction development to reach a final investment decision last year. Construction of the 488-metre long vessel is well under way at Samsung Heavy Industries’ shipyard in South Korea, and start-up is expected by 2017.

More than eight FLNG liquefaction projects, with a cumulative production capacity of more than 20m t/y are being considered in the Asia-Pacific region.

Philip Hagyard, senior vice-president of LNG at French engineering firm Technip, which has delivered front-end engineering and design work for Shell’s Prelude and Petrobras’ FLNG project in Brazil, sees some interesting prospects in Southeast Asia, but expects FLNG developments to blossom off Australia, with its sizeable, remote offshore gasfields.

Forecasts from consultancy Douglas Westwood suggest Australasia will net $12 billion, or 60%, of global capital expenditure on FLNG liquefaction capacity over the 2011 to 2017 period.

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