With FEED completed for its FLNG vessel, Delfin Midstream must secure offtake agreements, financing and onshore infrastructure to bring the first US floating LNG export facility closer to realisation
Emerging as the third largest exporter of LNG in the world, the US has six operating and several ‘second wave’ LNG export projects under development, proposed or in the planning stages. One of the most unique of these has been proposed by US-based Delfin Midstream; it combines two of the biggest innovations in the gas market in the last 20 years – the shale gas revolution and floating LNG technology.
Working with South Korean shipbuilder Samsung Heavy Industries (SHI) and liquefaction technology provider Black & Veatch, Delfin Midstream announced the completion of the front-end engineering design (FEED) for a floating LNG (FLNG) vessel in October.
Located at the Delfin Deepwater Port about 65 km off of Cameron Parish, Louisiana, the FLNG vessel would have a nameplate capacity of 3.5 mta, using gas turbine technology, with Black & Veatch’s Prico liquefaction technology, direct air cooling and waste-heat recovery to achieve maximum fuel efficiency and minimise greenhouse gas (GHG) emissions from operations.
Existing pipeline infrastructure in the US Gulf controlled by two Delfin Midstream subsidiaries will be used to feed gas to up to four FLNG vessels slated for development. Combined, the four FLNG vessels would have a total capacity of 13 mta. While several FLNG export projects have been proposed for the US, Delfin LNG is the only one to receive US federal approval and have the green light to export LNG to non-Free Trade Agreement (FTA) countries.
Combining FLNG technology with shale gas seems a natural fit for Houston-based Delfin Midstream, as the management team is led by two former Golar LNG executives. One of those is Delfin chief operating officer Wouton Pastoor, who served as Golar LNG head of commercial and director of FLNG development.
“The FLNG can provide berth to large ocean-going LNG carriers, LNG bunker barges and small-scale LNG carriers,” said Mr Pastoor in describing the vessel’s design. He said on the starboard side, the FLNG has two offloading manifolds, one uses marine loading arms for the large carriers and the other, cryogenic hoses to discharge LNG to smaller vessels. The FLNG vessel will have a minimum storage capacity of 180,000 m3.
In discussing the resiliency of the FLNG vessel design in the wake of recent hurricanes in the US Gulf, Mr Pastoor, emphasised the importance of sound design and operational measures to minimise potential downtime of LNG export facilities. He added: “The Delfin project is uniquely different since the FLNG vessels are self-propelled and use a disconnectable mooring solution to allow the FLNG vessel to sail away if a severe hurricane passes over the site.”
Mr Pastoor said Delfin has worked with a specific supplier of a disconnectable turret mooring technology over the past FEED period, but has not settled on a system.
Dynamic positioning (DP) will not be required for the FLNG vessel. “The only potential application for a DP system would be when the FLNG vessel would connect again to the mooring, riser and umbilical,” said Mr Pastoor. “However, we anticipate using assisting tugs for that operation and do not include any thrusters at the bow in a DP arrangement.”
|Current FLNG vessels in operation or under construction|
|Vessels||LNG mta||Owner||Operating area||Commissioned|
|Coral Sul FLNG||3.4||Eni||Mozambique||2022|
|Hilli Episeyo||2.0||Golar LNG||Cameroon||2018|
|Gimi FLNG||2.5||Golar LNG||Mauritania/Senegal||2023/24|
Mr Pastoor said Delfin is now working towards a fully termed lump-sum, turnkey engineering, procurement, construction, installation, and commissioning (LSTK EPCIC) contract, concurrently to the firm commercialisation with one or two offtake agreements and the debt/equity financing structuring.
Based on the results of the FEED, together with the overall project development activities, Delfin Midstream anticipates it will be able to execute the project for a total capital cost of around US$550/tpa.
Delfin chief executive Dudley Poston, one-time executive vice president at Golar LNG, said the company’s FLNG model was commercially flexible, allowing 20- and 10-year deal or flexible tolling structures. “Delfin continues to advance commercial discussions with multiple buyers and end-users and the completion of our FEED is a major milestone towards the FID of the first Delfin FLNG vessel,” said Mr Poston.
In July, the US Federal Energy Regulatory Commission (FERC) granted Delfin an extension to 28 September 2021 to complete the construction of onshore facilities that would transport gas to the Delfin LNG’s deep-water port facility. Delfin had request the extension “due to the global coronavirus pandemic, US trade disputes with China and a drop in oil prices, [making] it difficult to conclude LNG offtake agreements.”
New schedule for Gimi FLNG
Of the seven FLNG vessels currently in operation and under construction, scheduling for at least one has been upended by the coronavirus pandemic. In March, BP sent written notification of force majeure to Gimi MS Corp under the lease and operating agreement between the two companies. Those issues now appear to have been resolved, following an announcement by the Golar LNG subsidiary confirming a revised schedule with BP Mauritania Investments Ltd for the Greater Tortue Ahmeyim project offshore Mauritania and Senegal.
Under the revised project schedule the target connection date for the converted FLNG vessel Gimi, previously scheduled for 2022, has been extended by 11 months.
Singapore’s Keppel Shipyard is converting the Moss-type LNG carrier Gimi for the project.
“Although most parts of the FLNG Gimi supply chain have quickly recovered from delays as a result of lockdowns, progress in the yard was impacted during Q2 by the ‘circuit breaker’ in Singapore,” Golar LNG disclosed to investors in discussing its Q2 2020 results. “While the situation is now stabilising as construction manning ramps up, recovering the lost yard time within the original schedule is no longer possible.”
“Completion of the FEED is a major milestone towards the FID of the first Delfin FLNG vessel”
Once commissioned Gimi LNG hopes to emulate the success of Golar LNG’s operational FLNG, Hilli Episeyo.
In reporting Q2 2020 operating revenues of US$102.2M and adjusted EBITDA of US$67.2M, Golar LNG chief executive Iain Ross said: “This was driven by another solid performance in FLNG, with 100% commercial uptime on Hilli Episeyo, and a shipping business that continues to benefit from higher utilisation, delivering a Q2 time charter equivalent of US$45,100/day; which is above guidance and represents an 85% increase on the US$24,400 achieved in Q2 2019.”
Operating offshore Cameroon, FLNG Hilli Episeyo off-loaded its 42nd cargo and has exported over 2.5M tonnes of LNG over the nine quarters since its start-up. Golar LNG said it was in discussions with charterers Perenco and SNH to increase utilisation of Hilli Episeyo.
Building on its pioneering work in FLNG technology, Golar is continuing to develop and market its Mark III newbuild FLNG, saying it is “increasingly comfortable that this solution can be delivered at a cost per tonne of LNG that is comparable with Hilli Episeyo and significantly cheaper than most greenfield land-based LNG facilities.”
Prelude LNG not to restart until next year
Work is underway to restart production at Prelude FLNG after Shell suspended commercial operations in February 2020 following a series of technical issues. In a statement on 15 October, Shell said "We continue to work through the process for hydrocarbon restart of Shell’s Prelude FLNG facility, with safety and stability foremost in mind. Full production is not expected to resume before year end. Prelude is a multi-decade project, and our focus is on delivering sustained performance over the long term."
The setback for Prelude FLNG – the world’s largest FLNG vessel and largest floating facility – highlights the complexities of designing, building, maintaining and operating these mammoth liquefiers at sea.