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Smaller FLNG vessels showing outsized potential

Transborders Energy is pioneering small-scale LNG development for markets looking to buy modest volumes

In a region better known for its mega-sized liquefied natural gas export projects, Perth-based Transborders Energy (TBE) is pioneering a new concept for extracting and exporting small volumes of stranded gas via floating LNG facilities.

Using a generic, predetermined and replicable low-cost FLNG vessel and sub-sea tie-back development concept and commercial framework, TBE is aiming to tap into rising demand internationally for modest volumes of LNG.

"By targeting around 1.2m tonnes a year of capacity and through innovative financing and commercial structures with our contracting partners, we aim to deliver a differentiated off-take value proposition to LNG buyers," TBE's Managing Director Daein Cha told Petroleum Economist.

"Our objective is to create and deploy opportunities which fit a $6.5-per-million-British-thermal-unit free-on-board break-even LNG target price. This puts us in the middle of the second quartile of global LNG projects and competitive against greenfield projects coming out of the US or elsewhere," Cha adds.

In April 2018, TBE signed a joint study agreement with a major Asian LNG buyer to help progress their concept. The study will be completed during 2019.

Government backing

In May this year, the Australian Federal Government awarded TBE's concept Major Project Status (MPS). This means the government will help coordinate the State and Commonwealth regulatory processes required to get the concept off the ground, significantly improving TBE's chances of getting gas to market quicker.

"We see the early involvement of a major Asian LNG buyer in our project and federal government MPS award as strong endorsement of our value proposition and business model", says Cha.

TBE is screening discovered but stranded gasfields offshore Western Australia, the Northern Territory and in neighbouring international waters. "There are approximately 240 discovered but stranded offshore gas resources worldwide within the range of ~0.5 to 5 trillion cubic feet, of which approximately 40 gasfields, representing 65 trillion cf and at an estimated value of $65bn are in the Australian jurisdiction," says Cha.

Source: Australian govt, Resources and Energy Quarterly, March 2018

Owners have hitherto been unable or unwilling to commercialise due to issues around lack of materiality in their portfolio, the remote location of the assets and/or the lack of a low-cost development concept.

Targeting stranded gas

TBE is collaborating with Add Energy and TechnipFMC on the engineering, procurement and construction side, and with operation and maintenance adviser Modec to accelerate the project. It's aiming to sanction its first project in 2021, with first gas planned for 2025 when the international LNG market is expected to be short on supply. Thereafter, the concept can be replicated and deployed in other locations.

"We are taking a unique approach to resource development which is more suited to today's dynamic LNG market," says Cha. "This involves having a predetermined concept and then looking for resources which fit the concept. Our long-term vision is to establish a new global LNG supply source by deploying FLNG projects to unlock stranded gas resource opportunities in Australia and worldwide. We look forward to realising this vision in collaboration with our industry peers who continue to adopt and deliver FLNG projects as a do-able low-cost development solution."

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