FLNG project is viable option for Cott Oil and Gas

Cott Oil and Gas has proposed a development pathway for its Pandora LNG project, following a recent concept study carried out by FLNG developer Wison Offshore and Marine, which demonstrated that the proposal is technically and commercially viable.

Pandora Gas Field

Cott Oil and Gas is an oil and gas explorer and project developer focused in Papua New Guinea, with four licences and one gas discovery. The company’s flagship asset is the Pandora Gas Field, an offshore gas discovery with an estimated resource of approximately 800 billion ft³ of gas.

In June the company confirmed the technical and commercial feasibility of a floating liquefied natural gas (FLNG) development for the project, following a concept study by Wison Offshore and Marine.

LNG options

This FLNG project could produce between 1 – 2.5 million tpa of LNG, depending on the option chosen by Cott. The company is faced with two options:

1. Offshore FLNG

This would consist of a 1 million tpa offshore FLNG vessel incorporating gas clean up, liquefaction and storage for 170,000 m³ of LNG. The proposed FLNG vessel will have an estimated capex of US$ 900 million to US$ 1100 million.

The project will involve a three well development with subsea completions to an FLNG vessel with two 0.5 million tpa water-cooled liquefaction trains (supplied by Black & Veatch). It will also include external turret mooring, side-by-side or turret offloading (yet to be determined) and facilities for onboard gas treatment and sour gas reinjection

2. Near shore LNG vessel

This vessel would have 170,000 m³ of storage, with sufficient topside space to accommodate up to 2.5 million tpa of liquefaction capacity. The project would also involve construction of a buoyant tower for processing and sour gas reinjection, in addition to a 160 km clean gas pipeline to the near shore location.

The near shore LNG option has an estimated capex (including pipeline and buoyant tower) of US$ 1300 million – US$ 1400 million. There is an additional option for capacity to be expanded to include onshore gas; in this case, the near shore option would become an LNG hub with production capacity of up to 2.5 million tpa, if shared with other onshore projects in the region.

In both options, funding is likely to come from vessel and infrastructure owners.

Conclusion

The proposed Pandora FLNG project and Cott’s other Papua New Guinea projects have the potential to increase its value from circa US$ 8 million to just under US$ 400 million at the pre-development stage. Further growth would come from aggregating LNG projects in the region.

The FLNG option has the potential to become a high margin LNG project:

• Acquired as an existing discovery, therefore minimal sunk costs to recover.
• Field development requires a maximum of four shallow wells with dry completions.
• Hydrogen sulphide can be removed onboard the vessel or floating platform and reinjected.
• In the case of the near shore option, the cost of the pipeline and tower are offset by lower vessel capex.
• Toll treatment of pipeline quality gas can be delivered for less than US$ 6/mmBtu.
• LNG can be transported to key Asian markets for US$ 1/mmBtu.

Cott Oil and Gas has identified the optimum pathway for development of the Pandora Gas Field and, potentially, other gas discoveries. The company is now looking to develop a working group that includes potential owner-operators, contractors and adjoining licensees.

Edited from various sources by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/09072014/flng_proposal_from_cott_oil_and_gas_947/