east africa - major gas projects development plans and costs
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© 2014 Gaffney, Cline & Associates. All rights reserved. Terms and conditions of use: by accepting this document, the recipient agrees that the document together with all information included therein is the confidential and proprietary property of Gaffney, Cline &
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Mike Wood - GCA
East Africa - Major Gas Projects
Development Plans and Costs
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Gas Discoveries - Mozambique and Tanzania
Source: PetroView
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Mozambique
Source: Anadarko
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Mozambique LNG – Onshore Site Plan – Palma Bay
Source: Anadarko
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Tanzania
▪ Plans for developments to be integrated with major pipeline project
▪ Domestic demand for power and fertilisers
▪ Government demands onshore LNG plants
▪ Several onshore sites under consideration
▪ Fields are typically 100 km from shore
▪ Current plans for 4 x 5 MMtpa trains, fed by several operators/discoveries
Source: TPDC
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Tanzania - LNG Project Potential
▪ Several discoveries
▪ Similar development considerations as Mozambique
▪ Statoil has stated potential for FLNG – up to 3.5 MMtpa
Source: Statoil
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Mozambique LNG Project Summary
▪ Major integrated upstream/downstream project incorporating a multi-train onshore liquefaction facility to monetize significant gas discoveries from, initially, two offshore concessions in the Rovuma Basin, northeast Mozambique
▪ CAPEX: estimated by one sponsor a few years ago at up to US$16 Bn for initial two-train (10 MMtpa) development
▪ Natural gas production: initially 1,500 MMscfd for 2 trains from fields in Offshore Areas 1 & 4; 1,500 m water depth; gas is dry so liquids expected to be minimal
▪ Plant location determined: Afungi LNG Park, Palma Bay, Cabo Delgado Province, northern Mozambique; in vicinity of Offshore Areas 1 & 4
▪ LNG Plant Capacity: initially 10.0 MMtpa via 2 trains; with a notional 50 MMtpa in total
▪ Plans for 2 further Onshore trains
▪ Anadarko and ENI reported to be considering FLNG for future trains, and to develop other smaller discoveries in the Blocks - expected to be in the order of 2.5 MMtpa
▪ View is that FLNG has lower CAPEX !! Reported to be 30% lower costs for Australian Browse Basin projects
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Mozambique LNG - Project Development
▪ Deepwater, close to shore
▪ Dry gas – initially, limited flow assurance concerns
▪ Very prolific wells, - 100 MMscfd per well expected
▪ Remote region, no infrastructure
▪ All major hardware logistics likely to be by sea
▪ Site for onshore plant selected – appears to have reasonable ground conditions
▪ Camp – up to 10,000 workers for construction of 2 trains, airstrip, power plant required
▪ Construction efficiency uncertain
▪ Extended jetties, dredging required
▪ Late life water production may require future modification to subsea system & pipeline
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Onshore LNG Development Costs
▪ Much publicised benchmark rates – now reported to be
approaching $2,000 per tpa, (as high as $3,000 per tpa for
Gorgon)
▪ Apparent rapid growth in recent years
▪ But – no clarity in what is included in the cost:
– Offshore development costs, platforms, pipelines to shore??
– Gas pre-treatment - sweetening, LPG recovery??
▪ Actual liquefaction costs, including storage and export jetties
costs are probably nearer to $1,500 per tpa
▪ Still major uncertainties however, relating to location, site
conditions, access, infrastructure, labour efficiency and costs
▪ Wheatstone LNG site preparation costs (levelling and grading,
roads, dredging) reported to be $3 Bn !!
▪ Labour/construction costs in Australia are dominant factor
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Cost Estimate 5 MMtpa Onshore Plant – (750 MMscfd)
GCA estimate
Project Component Equipment & Materials
$ MM
Construction $ MM
Eng. / Mgt. & Owners
$ MM
Total Cost $ MM
Basis
Development Wells (15) 150 1,250 400 1,800 Standard, deepwater subsea wells.
Subsea Facilities 300 200 150 650 Standard configuration, current technology.
Pipeline to Shore 100 150 50 300 Close to beach, limited flow assurance risk.
Gas pre-treatment, condensate stabilisation, water handling
250 250 150 650 Sweet, lean gas, low condensate rates.
LNG Facilities 2,500 2,300 1200 6,000
Standard configuration, remote, poor infrastructure, but good ground conditions.
Storage, Marine Facilities, Dredging 500 700 400 1,600
Dredging required for LNG tanker access / turning
Total $ MM per 5 MMtpa 3,800 4,850 2,350 11,000
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Angola LNG – Development Challenges
▪ The 5.5 MMtpa, $10 billion Angola LNG plant shipped its first cargo in Mid 2013 after an 18-month delay
▪ Required major land reclamation/dredging effort
▪ Remote location
▪ Dedicated tankers included in costs??
Source: Bechtel
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Cost Uncertainties
Project Component Equipment & Materials
$ MM
Construction $ MM
Eng. / Mgt. & Owners
$ MM
Total Cost $ MM
Cost Drivers
Development Wells 150 1,250 400 1,800
Well productivity, Water depth. Rig Rates
Subsea Facilities 300 200 150 650 Gas Composition.
Pipeline to Shore 100 150 50 300
Distance to shore, flow assurance
Gas separation, pre-treatment, condensate stabilisation, water handling
250 250 150 650 Gas Composition
LNG Facilities, gas conditioning liquefaction, utilities, power
2,500 2,300 1200 6,000
Site and soil conditions, labour rates, access, logistics, regulatory compliance, local content
LNG Storage, Marine Facilities, Dredging 500 700 400 1,600
Water depth, soil conditions, storage capacity
Total $ MM per 5 MMtpa 3,800 4,850 2,350 11,000
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FLNG Costs
▪ Reported to be in the order of $2,000 per tpa for the FLNG vessel; including gas pre-treatment, but excluding subsea and well costs
▪ Reduced uncertainty – fabricated in shipyard – therefore independent of site conditions
▪ However as yet – unproven
▪ FLNG promoters claiming costs below $1,000 per tpa – what is included in this?
▪ Prelude FLNG costs are reported to be in the order of $3,000 per tpa of LNG (3.6 MMtpa) – but this also included costs for production of Condensate and LPG (1.7 MMtpa), - nearer $2,000 per tpa of liquids
▪ Potential cost savings in offshore infrastructure if fields are located distant from shore – eliminates pipeline costs
▪ Peak production capacity?
▪ Constraints on storage capacity?
▪ Availability uncertain?
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Prelude FLNG
Source: Shell
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Prelude
▪ 5.3 MMtpa of total liquids: including 3.6 MMtpa LNG, 1.3 MMtpa of condensate and 0.4 MMtpa of LPG
▪ Storage in the hull of the vessel
▪ Reported CAPEX of $10 Bn to 12 Bn
▪ Similar CAPEX indicated for 6 MMtpa dry gas case
▪ Remains higher than equivalent onshore LNG plant
▪ Bur valid for remote offshore fields
▪ Perceived reduced cost risk??
Source: Shell
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Other Contenders - FLEX LNG
Source: FLEX LNG
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Managing Uncertainty – a Hybrid Approach ??
Source: Iberdrola / Statoil
Transport of Snohvit LNG Liquefaction / Utilities Barge from Spain to Norway
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Snohvit LNG – Uncertainty Management
▪ Capacity 4.4 MMtpa LNG
▪ CAPEX reported to be $7.5 Bn (in 2006)
▪ Extensive subsea investment ~150 km multphase tie back
▪ Use of prefabricated LNG process module/barge, floated into position on the island
▪ Similar concept used for Sakhalin 1 Central Production Facility, and proposed for southern US liquefaction plants
Source: Statoil
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FLNG
▪ Appears to offer a cost benefit in some locations, where it
can offset costs for major offshore facilities or pipelines
▪ Similar cost levels to traditional onshore LNG
▪ Can offset construction cost uncertainty in difficult/remote
locations
▪ Potentially reusable
▪ As yet unproven – both in terms of development costs and
operability
▪ The “Snohvit” hybrid development, with process equipment
pre-fabricated on a barge, could be attractive for near-to-
shore fields, with a challenging onshore construction
environment
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