East Africa - Major Gas Projects
Development Plans and Costs
© 2014 Gaffney, Cline & Associates. All Rights Reserved.
Mike Wood - GCA
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Gas Discoveries - Mozambique and Tanzania
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© 2014 Gaffney, Cline & Associates. All Rights Reserved.
MAMBA COMPLEX
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Source: PetroView
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Moroni
Moroni
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Mozambique
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Source: Anadarko
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Mozambique LNG – Onshore Site Plan – Palma Bay
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Source: Anadarko
Tanzania
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▪ 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
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Source: TPDC
Tanzania - LNG Project Potential
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▪ Several discoveries
▪ Similar development
considerations as
Mozambique
▪ Statoil has stated
potential for FLNG – up
to 3.5 MMtpa
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Source: Statoil
Mozambique LNG Project Summary
© 2014 Gaffney, Cline & Associates. All Rights Reserved.
▪ 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
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▪ 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??
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▪ 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)
Project Component
Equipment &
Materials
$ MM
Construction
$ MM
Eng. / Mgt.
& Owners
$ MM
Total Cost
$ MM
Development Wells (15)
150
1,250
400
1,800
Subsea Facilities
300
200
150
650
Standard configuration,
current technology.
Pipeline to Shore
100
150
50
300
Close to beach, limited
flow assurance risk.
650
Sweet, lean gas, low
condensate rates.
Gas pre-treatment,
condensate stabilisation,
water handling
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LNG Facilities
250
2,500
250
2,300
150
1200
6,000
Dredging required for
LNG tanker access /
turning
500
700
400
1,600
Total $ MM per 5 MMtpa
3,800
4,850
2,350
11,000
GCA estimate
Standard, deepwater
subsea wells.
Standard configuration,
remote, poor
infrastructure, but good
ground conditions.
Storage, Marine Facilities,
Dredging
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Basis
Angola LNG – Development Challenges
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▪ The 5.5 MMtpa, $10
billion Angola LNG plant
shipped its first cargo in
Mid 2013 after an 18month delay
▪ Required major land
reclamation/dredging
effort
▪ Remote location
▪ Dedicated tankers
included in costs??
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Source: Bechtel
Cost Uncertainties
Project Component
Development Wells
Subsea Facilities
Pipeline to Shore
Gas separation, pre-treatment,
condensate stabilisation, water
handling
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LNG Facilities, gas conditioning
liquefaction, utilities, power
LNG Storage, Marine Facilities,
Dredging
Total $ MM per 5 MMtpa
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Equipment &
Materials
$ MM
Construction
$ MM
Eng. / Mgt.
& Owners
$ MM
Total Cost
$ MM
Cost Drivers
150
1,250
400
1,800
300
200
150
650
Gas Composition.
100
150
50
300
Distance to shore, flow
assurance
Well productivity, Water
depth. Rig Rates
Gas Composition
250
250
150
650
2,500
2,300
1200
6,000
Site and soil conditions,
labour rates, access,
logistics, regulatory
compliance, local content
500
700
400
1,600
Water depth, soil conditions,
storage capacity
3,800
4,850
2,350
11,000
FLNG Costs
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▪ 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
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Source: Shell
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Prelude
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▪ 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
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Source: FLEX LNG
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Managing Uncertainty – a Hybrid Approach ??
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Transport of Snohvit LNG Liquefaction /
Utilities Barge from Spain to Norway
Source: Iberdrola / Statoil
Snohvit LNG – Uncertainty Management
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▪ 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
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Source: Statoil
FLNG
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▪ 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-toshore fields, with a challenging onshore construction
environment
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