China Studies Floating Gas Plants for South China Sea

Posted by Eric Haun
Wednesday, July 16, 2014
Photo: CNOOC

Chinese energy giant CNOOC Group is studying the possibility of building a multibillion-dollar floating liquefied natural gas (FLNG) vessel, as-yet untried technology that would likely be used to produce gas from the deep waters of the South China Sea.

While the state-run company has made no public announcement, a pre-feasibility study was well under way, CNOOC and other industry officials said. CNOOC was already talking to global engineering firms about possible joint design of the vessel, two industry officials added.

FLNG ships are ocean-based liquefaction plants that can be positioned above reserves to chill extracted gas and load it into LNG tankers for delivery. That could make fields too remote or too small to develop using undersea pipelines viable for production.

About 10 FLNG facilities are being planned globally with a handful under construction, among them the biggest, Prelude, owned by Royal Dutch Shell and due to be producing from an offshore Australian field by 2017. Shell has shied away from offering estimates of Prelude's likely cost, but analysts say it could be more than $12 billion.

While a Chinese FLNG plant might be some years away, industry officials said such vessels could become an important component of Beijing's strategy in the South China Sea - including in disputed waters - as the country looks to boost its offshore energy output.

CNOOC Group also owns a $1 billion oil rig that was deployed by state-run China National Petroleum Corporation (CNPC) to drill in waters claimed by Vietnam in early May. On Wednesday, CNPC said the rig had finished exploration after finding signs of oil and gas near the Paracel Islands.

Searching for Another Daqing

CNOOC Group was doing a pre-feasibility study to evaluate the potential costs and returns of using FLNG technology, the firm's chief deepwater researcher, Xie Bin, told a seminar last month.

In the energy sector, a pre-feasibility study comes first and is usually followed by more detailed research and design, which could involve outside experts and a bigger budget.

"For disputed waters, we need to be self-sufficient because we can't expect onshore support from any neighbouring nations," Xie said in the Chinese city of Tianjin. Approached later at the seminar by Reuters, Xie declined to make additional comments.

He gave no cost estimate for building an FLNG facility, although other industry officials said it could run to several billions of dollars.

CNOOC Group, parent of the flagship listed unit CNOOC Ltd , told Reuters on Tuesday that research into FLNG technology was under way but declined to say more.

The group has long said it wanted to conduct more exploration in deeper waters off China, having in 2010 set a goal to find by 2020 another "Daqing" - an onshore field in the country's northeast that produces one million barrels per day of oil equivalent.

China has so far made only one major gas find in the deep waters of the South China Sea, the Liwan 3-1 field in undisputed Chinese territory off Hong Kong. The field is being developed by CNOOC and Canada's Husky Energy.

Beijing claims about 90 percent of the South China Sea, whose estimated energy potential varies widely, although geologists believe it holds more gas than oil. Vietnam, the Philippines, Malaysia, Brunei and Taiwan also claim parts of the key waterway.

Mini-Vessel

Xie said CNOOC was looking at an FLNG plant that could handle up to 2.4 million tonnes of gas per year (tpy) and operate at a depth of 1,500 metres (4,900 feet). Other industry sources said it might start with a smaller 1 million tpy vessel.

Prelude by comparison will produce about 3.6 million tpy - still small versus some land-based LNG plants.

In April, an in-house article on CNOOC Group's website said its research and development arm together with two Chinese universities had designed a small-scale FLNG vessel with a capacity of about 5,000 tpy.

The company planned to build the model by the end of September and test it off the northeastern port city of Yingkou, the article said.

CNOOC Group is also courting foreign firms about possible joint design of an FLNG ship, said Li Jianmin, head of the deepwater engineering department at CNOOC Ltd, and Feng Qin, chief specialist for offshore engineering at Asia's top oil refiner Sinopec Corp.

Both Li and Feng declined to name potential partners. They spoke to Reuters last week.

Feng said he was aware of CNOOC's study as well as plans by other Chinese energy firms to research FLNG technology. While Feng would not say if Sinopec was interested in FLNG, he said it was a promising option for the South China Sea.

"FLNG has an unrivalled advantage for relatively small-scale deepwater gas fields versus subsea pipelines," Feng said.

In disputed waters, a single vessel would also be much easier to protect than potentially hundreds of kilometres of pipeline.

Wang Jinlian, secretary-general of the China Association of the National Shipbuilding Industry, told Reuters the government was ready to finance research and development and offer tax incentives for any local manufacturing work needed to build such floating liquefaction plants.

Government officials could not be reached for comment, but the Ministry of Finance issued a policy document in April supporting local companies developing offshore engineering technology through tax incentives and the waiving of import tariffs on components and raw materials.

(By Chen Aizhu; Editing by Dean Yates and Tom Hogue)

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Technology

MSC Cruises Advance Onboard Wi-Fi System

MSC Cruises has started a fleet-wide optimization installed by Marlink to improve shipboard VSAT (Very Small Aperture Terminal) connectivity. MSC Cruises said it

New Training for Man Overboard Response

Falling overboard is a life-threatening emergency, not only for the person in question but also for those involved in their rescue. Every step in the rescue process

Sapurakencana Wins 3 Petronas Oil blocks

SapuraKencana Petroleum Berhad today announced that it has entered into Sale and Purchase Agreements to acquire the entire interest of PETRONAS in 3 blocks offshore

LNG

Interferry Welcomes IMO Decision on LNG Fuel Tank Placement

Interferry has welcomed a decision at last week’s IMO Maritime Safety Committee meeting (MSC94) setting out rules for the location of fuel tanks on LNG-powered ships,

HHI to Build FSRU for Höegh LNG

A new Floating Storage and Regasification Unit (FSRU) will be built by the Korean shipbuilding Company Hyundai Heavy Industries (HHI). This FSRU will be the fifth

BG Group's Queensland Curtis LNG to Ship First Cargo

BG Group is set to ship the first cargo of liquefied natural gas from its flagship gas project Queensland Curtis LNG on Dec. 20, a source familiar with the matter told Reuters.

News

Cathelco BWTS Receives AMS Approval

Cathelco Ltd. has received Alternate Management Systems (AMS) acceptance from the U.S. Coast Guard for their ballast water treatment system.   AMS acceptance

Hagel Resigns as Defense Secretary

U.S. Defense Secretary Chuck Hagel resigned on Monday, the first major change to President Barack Obama's Cabinet since his Democrats were routed in midterm elections three weeks ago.

Ferus Smit to Launch Newbuild Bulk Carrier

Ferus Smit will launch newbuild general bulk cargo vessel Arklow Brave on Friday, December 12, in Westerbroek.   Arklow Brave is the fifth vessel in a series

Government Update

Hagel Resigns as Defense Secretary

U.S. Defense Secretary Chuck Hagel resigned on Monday, the first major change to President Barack Obama's Cabinet since his Democrats were routed in midterm elections three weeks ago.

Dutch Yards May Need to Rethink Contract Structures

Rotterdam-based law firm AKD said a recent decision of the Dutch courts means that shipyards in The Netherlands may no longer be able to rely on the right to retain

Egypt Eyes Suez Container Port Renegotiation

Egypt is trying to renegotiate an extension of an agreement worth $1.5 billion with Suez Canal Container Terminal which has a concession to run a port near the entrance to the canal,

Offshore Energy

Andrews to Lead CWind’s O&M Division

Lee Andrews has been appointed as CWind’s new global head of operations for maintenance and asset management (O&M) services.   Andrews joins CWind from Siemens

Maersk Drilling gets Extension for Jack-Up

Maersk Drilling, is a unit in shipping and oil conglomerate A.P. Moller-Maersk. Hess has exercised the four one-well options included in the current contract for the jack-up rig Maersk Resolute.

Odd Arne Slettebø new CFO of “Noreco”

Norwegian Energy Company ASA has appointed Odd Arne Slettebø as Chief Financial Officer (CFO). Odd Arne Slettebø replaces Tommy Sundt who has been appointed new CEO of the Company.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Navigation Pod Propulsion Port Authority Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2581 sec (4 req/sec)