There has been significant interest in FLNG since Shell first sanctioned Prelude, the first of its kind, in 2012, and while the future for the technology seems bright, RISC's Perth-based principal Martin Wilkes says that is unlikely to be the case in Australia.
Six more FLNG facilities have been sanctioned since Shell approved Prelude's development: Golar LNG has commissioned three FLNG conversions, Belgian group Exmar two FLNG barges and Petronas the PFLNG1 new-build.
Of these, only the Petronas PFLNG1 vessel has been completed and is now in the field, and one of the Golar vessels has been assigned to Perenco's Cameroon FLNG.
Just last week, Wilson Offshore & Marine completed performance testing of the world's first barge-based FLNG unit at its yard in Nantong, China, marking the first time LNG has been produced on board a floating facility.
While in Australia FLNG has been studied for Browse, Bonaparte, Scarborough and a number of other offshore gas fields, the drop in oil prices has made all these projects economically challenged by the corresponding reduction in future revenues in a ‘lower-for-longer' world.
Late in 2015 Engie announced that an open-water FLNG project was technically achievable but did not meet commercial hurdles, and indicated that studies would concentrate on other options.
Earlier this year the Browse FLNG project was postponed indefinitely due to poor economic conditions, and other development options are once again being considered.
However, Woodside has indicated the development could still be sanctioned to start production in time for when the LNG glut opens up in the early 2020s.
Wilkes said the FLNG option was still open for Browse if the JV can find cheaper ways to develop it via three phased developments, as Woodside CEO Peter Coleman has said.
"The only reason they were going to develop Browse as a whole was you need the critical mass to get to shore [under the earlier James Price Point option], so if you do that they will have to be developed together. The FLNG option would allow them to be split up," Wilkes said.
"So there is still an option there that says you could do it via FLNG. The question is what size of FLNG?"
Wilkes told Energy News he would put Woodside's Greater Sunrise in the same bracket as Abadi in Indonesian waters, due to the aforementioned economic factor but particularly the all-important diplomatic element.
Tensions over Sunrise escalated last week when Timor-Leste had a win in its case against Australia over a disputed maritime boundary in The Hague's permanent court of arbitration.
Timor-Leste wants Greater Sunrise developed onshore and has rejected Woodside's attempt to develop it via FLNG.
While non-binding, a win in The Hague recognising that most of Greater Sunrise sits within Timor-Leste waters is another blow for FLNG.
FLNG challenges
Wilkes believes Timor-Leste will take a similar route as Indonesia did with the Abadi development, as it ordered the Abadi partners to stop looking at an FLNG development and to focus on a land-based option for development.
Other projects are similarly troubled.
Petronas has delayed commissioning its PFLNG2 project, Exmar needs to find a new home for its first barge following the cancellation of the Caribbean FLNG project, and Shell has cancelled three FLNG hull orders from the Samsung shipyard.
"Either significant price rises or costs reductions will be needed to re-energise these projects," he said.
"RISC has previously indicated that we consider that the sweet spot for FLNG may well lie in the small to medium scale application (less than 2MMtpa) rather than the larger scale options that are under consideration for the Australian projects.
"This is because the vessels can be built in multiple locations, and/or can be based on conversion of existing LNG carriers, and therefore development and costs may be driven down by competition.
"It is also noteworthy that the Perenco project (1.2MMtpa) was the only FLNG project, and the only LNG project outside of the USA, to be sanctioned in 2015."
ExxonMobil has re-iterated that FLNG remains the preferred development option for Scarborough, but the recent acquisition of a 25% stake in the project by Woodside must increase the chance of a tieback to the Woodside-operated North West Shelf LNG plant as an alternative development option.
"If Scarborough follows Browse and Bonaparte in the move away from FLNG this would leave Prelude as the only FLNG development in Australian waters in the foreseeable future," Wilkes said.
