To float or not to float

Floating LNG (FLNG) production units had been contemplated for almost three decades before the Final Investment Decision (FID) was made for Prelude FLNG offshore Australia in 2011. With that decision, the long road to making FLNG a reality began in earnest.

While the support of major energy players and the energy transition towards natural gas helped to kick-start the development of FLNG, more recent projects are focused on smaller scale applications, including direct gas exports and LNG bunkering.

Demand for natural gas continues to grow as a substitute for coal and oil in power generation, as fuel for transportation, and as an industrial feedstock. It is therefore prudent to have workable solutions for storage, handling, and loading of gas as a means to bring it to a diverse range of consumers.

FLNG can typically be the preferred solution where conditions make it challenging to pipe the gas due to distance, water depth, pipelaying difficulties, or a combination of these. Another element that can push towards FLNG rather than onshore plants is remote locations, because a floating plant can be built under controlled conditions in a shipyard.

The search for viable, safe, and cost-effective solutions for producing what used to be deemed

stranded gas and bringing it to market has gathered pace. Gas has continued to gain traction as a fuel for power generation and its position as the cleanest burning hydrocarbon continues to make it an important part of the energy transition away from more polluting fuels.

When in the planning and feasibility stages of an FLNG project, desktop exercises are commonly required to determine cost-effective and safe solutions for processing, storage, and liquefaction of gas. Projects will often require an application of new technologies as well as merging technologies from: onshore gas processing and liquefaction, offshore production and processing from the upstream energy business, and LNG storage and offloading from the LNG shipping business.

The regulatory environment for FLNG units must also ensure that risk issues related to cryogenics and large inventories of gas and pressurised gas are fully addressed. It has to ensure there is a seamless transition between the FLNG hull and the topside facilities from a regulatory framework point of view.

Regulations and compliance for FLNG units will need to be co-ordinated to encompass the requirements of class, flag, and international regulations, as well as the local requirements where the units are intended to operate. Some assistance in moving this forward has been gained by the advent of floating regasification units, although most of these units are classed as ships and not as facilities.

These units did however move forward the concept of a floating unit with integral LNG storage, ship-to-ship transfer of LNG, and simple processes onboard as the LNG is liquefied before being supplied for its end use.

Figure 1. Pilot LNG is focused on midstream LNG greenfield and acquisition opportunities across North America and internationally.

Figure 2. Woodfibre plans to construct an LNG export terminal incorporating floating storage on the site of a former pulp mill.

ABS is currently supporting two projects, both of which demonstrate new approaches to FLNG; extending the concept to international exports and the supply of fuel for LNGpowered cruise ships.

Pilot LNG is focused on midstream LNG greenfield and acquisition opportunities across North America and internationally. The company’s belief is that by mitigating environmental impacts it is possible to provide innovative midstream and downstream solutions that create efficient pathways to market.

The venture plans to originate and develop new market access to LNG via floating storage and regasification units (FSRU) and floating LNG bunker terminals as the fastest and most cost-efficient means to unlock new global markets.

Its portfolio of LNG import, downstream, and LNG bunker solutions includes the proposed Galveston LNG bunker port which will supply the growing market for LNG as marine fuel in one of the US’s busiest port complexes, serving the ports of Houston, Texas City, and Galveston.

The project is designed to take advantage of the strong demand outlook for LNG as a bunker fuel market due to its ability to meet IMO requirements for carbon emission reductions whilst also meeting the most stringent standards for SOx, NOx, and particulate matters as well. This is particularly prevalent for the Galveston/Houston region in Texas as it is already designated as a non-attainment area due to its poor air quality.

The rapid growth of LNG-powered vessels in operation and on order in Asia and Europe, together with LNG’s competitive position when compared with low sulfur marine fuels, suggests the long-term economics favour LNG over petroleum-based marine fuels. A bunkering vessel will deliver LNG to client ships, principally targeting the cruise terminal at the Port of Galveston which handled around 300 port calls and sailings in 2019. A new, third cruise terminal was announced in October 2019, adding 59 future sailings and with the capacity to add a further 100 sailings.

LNG can also be supplied to the increasing number of dual-fuel vessels including tankers, containerships, and car carriers expected to call at the ports of Houston/Galveston/ Texas City.

Located on the northeast corner of Pelican Island, the FLNG terminal to be positioned at Galveston features a liquefaction capacity of 0.5 million tpy and a storage capacity of 18 000 m3, with electricity supplied by renewable energy sources. The Tango FLNG unit, which shares several design features with the Pilot LNG bunker liquefaction floater, held successful gas trials in September 2016, at the Wison Nantong Shipyard, China and was delivered in January 2017. The unit has until recently been operating successfully in Argentina at Bahia Blanca for energy major YPF.

Providing LNG bunker fuel via an FLNG unit in Galveston Bay avoids costly transportation from distant supply sources along the US Gulf Coast. The vast intrastate pipeline grid in Texas allowing gas supply to the FLNG unit is a key contributing factor in the regulatory/permitting process here. Associated distribution logistics and terminal costs are lower when compared to the delivered cost of LNG bunkers in Europe or Asia.

The decision to employ an FLNG unit was influenced by both a reduction in the time necessary for the Texas

permitting process by around two years compared to the federal (FERC) regulatory timeline for energy infrastructure, and by the very competitive capital costs of the terminal compared to traditional land-based facilities. Pilot LNG has exclusivity on the site and has completed initial due diligence and fatal flaw analysis with no issues. FID is expected in 2Q22 with an in-service date estimated for 2Q25.

The Woodfibre LNG Project is owned and operated by Woodfibre LNG Ltd, a privately held Canadian company based in Vancouver, British Columbia (BC). It plans to construct an LNG export terminal incorporating FLNG storage on the site of the former Woodfibre pulp mill (located approximately 7 km southwest of downtown Squamish), sourcing natural gas from Pacific Canbriam Energy, a Canadian company with operations in north-eastern BC.

Woodfibre LNG will convert two existing Moss-type LNG carriers for storage service, moored to a jetty at the site. FLNG storage means the venture can repurpose existing ships with a potentially long service life left in LNG containment, saving space on-site whilst also saving money and time on the schedule. By not building new storage tanks onshore at the site, the project is less intrusive to the local environment as the storage units can simply be towed away after the life of the project ends.

Since the project was announced, Woodfibre LNG has received three environmental approvals from: the state and Canadian governments and from the Squamish Nation. The process of gaining consent from the Squamish Nation was the first of its kind and resulted in the first-ever environmental approval by an Indigenous people in the absence of a treaty. Woodfibre will employ renewable hydro-electricity for power, making it one of the cleanest LNG export facilities in the world, shipping LNG principally to Asian markets.

Woodfibre LNG has recently signed a second LNG Sales and Purchase Agreement (SPA) with BP Gas Marketing Ltd (BPGM) for the delivery of LNG from the LNG export facility. Under the terms of the agreement, BP will receive 0.75 million tpy of LNG over 15 years on a free onboard basis. This latest agreement will increase BPGM’s total LNG off-take to 1.5 million tpy – over 70% of Woodfibre LNG’s future annual production.

Class involvement is an integral part of a successful FLNG project, whether for safety assessment, verification, regulatory approval, or the most suitable application of technology. With a growing variety of FLNG units, locations, and potential climates to consider, each project must be considered on its own merits.

Some of the prescriptive rules traditionally employed for onshore LNG storage may not work as well for an FLNG unit as a marine installation. For these reasons, probabilistic tools as well as different types of risk analyses and workshops are used to demonstrate the safety of the design within acceptable safety criteria.

To develop the appropriate safety and operational criteria, operators should consider the regulatory elements of the project at the earliest possible stage. Class can provide valuable assistance in this phase and help develop the regulatory compliance matrix, dialogue with the local regulatory body and other stakeholders, and support continued innovation in FLNG.