Zeus Development Corp

LNG: Moving Offshore 

LNG’s March to Sea – 

A Review of the Projects 

And Their Market 

Implications 

Bob Nimocks 

Zeus Development Corp

Introduction 

Tow of process barge, August 2003, courtesy Linde 


Introduction 

Barge top-side construction in Cadiz yard courtesy Linde 


Steps toward the Marinization of LNG Technology 

2005 Sanha LPG FPSO Oct 2002: Project announced with daily 

production capacity of 6,000 cm and 

storage capacity of 135,000 m3. 

Fall 2004: Slated to sail to offshore 

Cabinda, Angola. 

2005 Excelerate Energy’s 

regas ships 

First ship due out of the DSME yard by 

end of 2004, second one in March 2005, 

third by end of 2006. 

2006 Snøhvit’s bargemounted 

liquefaction plant 

Plant is due to be completed by Dragados 

Offshore by the middle of 2004 and 

installation and hook-up by 2005. 

Presented during conference 


Snøhvit’s barge-mounted liquefaction plant 

Capacity 

Single train facility 

Liquefaction process 

All electric drive 

Power generation 

Location 

Owner 

Operator 

4.3 MTPA 

620 MMSCFD 

Mixed Fluid Cascade ® 

~180 MW 

5 x LM 6000 

Melkøya Island near Hammerfest 

Northern Norway 

Snøhvit Group 

(Petoro, Statoil, Total, GdF et. al.) 

Statoil 



Picture courtesy of Statoil 

Picture courtesy of Statoil 



Picture Picture courtesy courtesy of of Statoil Statoil 



2007 ExxonMobil/QP/ Jun 2001: Edison signed 25-year 

agreement to buy 3.5 MTPA from the 4 th 

Rasgas train starting 2005 

Edison North 

Adriatic gravitybased 

terminal 

Nov 2003: ExxonMobil, QP acquired 90% 

of the project 

Jun 2004: Aker Kvaerner completed the 

FEED and has been awarded contract to 

conduct detailed design and construction 

plan 



2007 Excelerate’s 

Northeast (Mass.) 

Gateway Project 

Aug 2004: Excelerate announced it hopes 

to receive a permit December 2005 for a 

baseload service of 400 MMcfd and 

peaking up to 800 MMcfd. 

2007 ChevronTexaco’s 

Port Pelican GBS 

terminal 

Oct 2003: Aker Kvaerner was awarded a 

contract to perform engineering, 

procurement and construction 

2008 ChevronTexaco’s management, (EPCM) services for 

Baja California GBS concrete structures placed on the seabed 

terminal 

for the proposed Port Pelican and Baja 

California offshore LNG terminals. 


CVX initially estimated the Port Pelican 

project to cost between $400-$600 million 

depending on storage 

Estimates for the Baja terminal are $650 

million for a 1.4-Bcfd terminal 



2007 McMoRan’s Main 

Pass Energy Hub 

June 2004: USCG/MARAD gave notice 

that they had received a deepwater port 

application and that the application 

appeared to contain the required 

information. 

2008 Shell USA Gulf 

Landing 

Jan 2004: Notice of Application published. 

Commenced preliminary EIS. 

2008 ExxonMobil Pearl 

Crossing 

May 2004: USCG application filed. Aug. 

30-Sept. 3, 2004, public hearings 




2008 BHP Billiton’s Jan 2004: USCG issued notice of 

Floating Cabrillo application issued. Preliminary EIS 

Port 

underway. 

Jun 2004: Australian Prime Minister John 

Howard and BHP Billiton Chairman Donald 

Argus briefed Gov. Schwarzenegger on 

their planned $600M terminal. 

2008 Crystal Energy 

Clearwater Port 

Jan 28: Deepwater port application 

submitted. Application distributed for 

designated federal & state agencies for 

determination of completeness. 

2009 ConocoPhillips 

Compass Port 

terminal 

Construction of the Compass Port project 

might begin next year if it wins regulatory 

approval and take about three years to 

complete. 




200? Freedom LNG Located off the central La. coast, the 

terminal features two unique attributes: 

(1) salt-cavern storage and (2) a weatherveining 

dock rather than a gravity-based 

structure or fixed platform. 

2010+ Aker Kværner, 

Linde, Statoil LNG 

Technology 

Alliance 

Aug 2004: Three-year technology alliance's 

formed to develop cost-effective offshore 

production, storage and offloading of LNG, 

thus enabling the exploitation of larger gas 

fields in such remote areas as Nigeria, 

Venezuela and Brazil. 




• Marinization of LNG technology in full swing 

•10 stationary offshore receiving terminals proposed 

•2 regas ship terminals 

•3 projects related to offshore liquefaction 

• What are the ramifications of a world with LNG facilities 

located offshore? 


Ramifications of Offshore LNG 

Offshore relative to onshore 

SAMPLE 

OFFSHORE 

PREMIUM Baja Freeport 

Capex $ 650,000,000 $ 500,000,000 

Assumed life (years) 50 50 

Wtd average cost of 

capital 12% 12% 

Annual amort. $78,270,831 $60,208,332 

Daily sendout (Bcf) 1.4 1.5 

Annual sendout 

(MMBtu) 536,550,000 574,875,000 

Amortized capex 

($/MMBtu) $0.15 $0.10 

Annual operating 

cost ($/MMBtu) $60,000,000 $30,000,000 

Amortized opex 

($/MMBtu) $0.11 $0.05 

Offshore regas 

premium ($/MMBtu) $0.10 


Market Implications of Offshore LNG 

Offshore more expensive 

Offshore 

terminals 

relative to 

onshore 

Incremental expansions, however, less expensive 

Offshore able to accommodate super-large LNG ships 

•200,000-250,000 cu meters 

•Possibly two at a time 

Offshore has access to seawater vaporization 

Regas ships can pick off seasonal markets 


Market Implications of Offshore LNG 

Offshore more expensive 

Offshore 

terminals 

relative to 

onshore 

Incremental expansions, however, less expensive 

Offshore able Incentives to accommodate to build super-large LNG ships 

•200,000-250,000 super-large cu meters 

•Possibly stationary two at terminals a time or 

nimble regas ships 

Offshore has access to seawater vaporization 

Regas ships can pick off seasonal markets 


Super-Large Stationary Offshore Terminals 

Environmental 

issues 

Traffic 

safety 

Risk 

management 

L N G 

L N G 

L N G 

Siting, 

off-take 

capacity 

LPG 

manage 

ment 

Storage 


Nimble Regas Ships 

Route 

distance 

Gas-ongas 

competition 

Interruptibility, 

storage 

Regas L N G 

Speed of 

development 


Super Offshore Liquefaction Plants 

Field 

recovery 

strategy 

Sizing 

Multiproduct 

mgt 

Versatility 

Safety 

Environ 

mental 

issues 


Super Offshore Liquefaction Plants 

500 

400 

300 

200 

100 

0 

Mobil’s 

FLNG 

Design 

Norne FPSO 

(1998) 

Schiehallion 

FPSO (1998) 

Asgard 

FPSO (1999) 

Girassol 

FPSO (2001) 

000 BOE/D 

Zeus Development Corp 

Data Source: Stanford Engineering

Summary 

• At least 15 substantive programs 

underway for offshore LNG 

• Some $6 billion in offshore terminal 

construction proposed at ten 

terminals 

Objectives of this conference 

Review the breadth of strategies for moving LNG offshore 

Assess the economic and market implications 

Determine the speed at which this migration is occurring 

Review the regulatory hurdles 

Consider the effect of rising raw material costs 

Learn of new projects and technologies 


Conference Agenda 

9:15 - 12:00pm 

Panel: Offshore Receiving Terminal Projects 

Kathleen Eisbrenner, president, Excelerate Energy 

David Landry, vice president, Freeport McMoRan Energy LLC 

Bill Perkins, president, Crystal Energy 

Craig Taylor, president, HNG Storage 

LUNCH 



1:30 - 3:30pm Panel: Updates in Offshore Structure Designs 

1) Gravity-Based Systems (GBS) 

Greg Pepper, vice president, Aker Kvaerner 

2) Existing Product Platforms 

Bill Bennett, president, Bennett & Associates 

3) Floating, Storage, & Regasification Units (FSRU) 

Bjørn K. Markussen, senior advisor, floating midstream solutions, Höegh LNG 

4) Regasification Ships 

David Lim, general manager, Exmar Shipping USA 

Jens Kaalstad, president, APL, Inc. 

3:30 - 4:00pm Break 



4:00 - 5:30pm Certification Issues 

Are Regulator's Catching On to Offshore LNG? 

William H. Daughdrill, principal environmental scientist, Ecology & Environment, 

Inc. 

From Gas Carriers to Offshore Regasification - How the Classification Societies 

and Administrations Intend to Assure Safe and Environmental yet Economic 

Offshore LNG Facilities 

Phillip Rynn, senior staff consultant, American Bureau of Shipping 

5:30 - 6:30pm Reception 



Thursday, September 9, 2004 

7:30 - 8:30am Continental Breakfast 

8:30 - 9:15am Rising Raw Material and Construction Costs and Its Impact on 

Offshore Terminal Capex 

John Wolff, director, Zeus Development Corporation 

9:15 - 10:00am Advancements in Offshore Liquefaction: Sanha LPG FPSO 

Project 

Wim Van Wijngaarden, product development manager, Single Buoy Moorings 

(SBM) 

10:00-10:30am Break 



10:30 - 12:00pm Panel: Disruptive Technologies That Could Change the 

Competitive Dynamics of Offshore LNG 

Vacuum-Insulated Piping 

John W. Bonn, business development manager, Chart Industries 

Ambient Air Vaporization 

Ned P. Baudat, midstream project management, Mustang Engineering, L.P. 

Saipem's New Floating LNG Terminals 

Olivier Lenormand, Saipem S.A. 

Regas Terminals for Standard LNG Carriers 

Claes W. Olsen, vice president business development, Remora Technology 

New Solutions for Production and Transport of Petroleum Offshore 

Jens Korsgaard, president, Maritime Oil & Gas Corp. 

Conference Ends

Zeus Development Corp

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