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What are the issues involved with the classification of FLNG and FSRUs?

By Richard Nott, Head of Offshore & Global Projects, and  Mark Tipping, Manager Offshore Technology

Floating liquefied natural gas (FLNG) facilities such as Shell’s Prelude and Petronas’ Satu coming online as well as Chevron’s onshore Gorgan project have greatly increased the availability of LNG. With so many large LNG projects coming on stream the nature of gas as a primary fuel for not only the developed world, but also emerging economies, is changing and it is predicted that this expansion in the gas market will drive down technology costs and therefore open up gas as a fuel to an even larger market.

With greater availability of gas, the trading nature of gas has also started to change. While gas prices have historically tended to be more localised and more dependent on fixed long-term sales contracts than oil, we have seen a move to a more active spot market – often at considerable discounts to long-term contract pricing. This has been enabled by the increase in transportability of LNG due to growth of the LNG carrier fleet and receiving facilities.

The current, and likely continuing, lower gas price environment has several main effects:

  • A push for cheaper, simpler, field development solutions on the upstream (FLNG) side.
  • An increase in demand for supply-side FSRU (floating storage and regasification unit) solutions which, of course, are on the upside of a lower gas price and provide a practical solution to the growing energy (particularly electricity) demands of developing nations – or anywhere where extended electricity grid networks are impractical.
  • Renewed interest in gas compression projects.

These market developments are having inevitable knock-on effects for the types and designs of assets that are favoured for production or supply of gas from LNG – and consequently are exerting pressure on class societies to deliver rules and guidance for these new designs. While there are similarities in the technical challenges (particularly for near-shore operations) between FLNG and FSRU, we will consider them separately.

FLNG – Smaller, faster, cheaper

Instead of having a land-based LNG plant fuelled from a (consequentially very large) floating platform (meaning that the gas reserves would need to be sufficiently large to justify the large field development capex) FLNGs are smaller, simpler assets which can be mobilised more quickly to smaller fields, allowing swift monetisation of projects on this smaller scale.

Options:

  • Simpler liquefaction process allowing smaller footprint, but at reduced efficiency.
  • More complex, miniaturised liquefaction plant offering smaller footprint but better efficiency.
  • Number of (more traditional) gas floating production storage and offloading (FPSO) units providing gas conditioning linked with a centralised liquefaction facility – allowing individual units to be smaller and less complex, potentially reducing the need for more extensive subsea infrastructure.
  • FLNG providing liquefaction (only) facilities for gas produced and conditioned elsewhere and accessed via land or subsea pipeline. Advantages over land-based solutions for remote areas or those with difficult political or social circumstances.
  • Near shore export FLNGs ranging from simple LNG storage and offloading to full blown FLNG solutions.

All of these options are now being explored or actively developed in response to the demand of various local circumstances

Gas compression FPSOs

As a consequence of the driving down of cost, the industry continues to seek innovative solutions to monetarising large and small offshore remote gas supplies, proposals being considered are for:

  • Very large offshore floating gas compression projects, the upside being the ability to eliminate the need for onboard storage with the complexity and associated cost. There is also sufficient experience and confidence in compressed natural gas (CNG) for combined storage and pipeline solutions.
  • Long deep subsea compressed gas pipelines, the downside and opportunity of not providing onboard storage.

FSRU – versatility and diversity

In response to local circumstances, FSRU designs can come in a variety of shapes and sizes. It is the high versatility of this asset type which gives it its advantages, particularly over shore-based solutions. However, this also throws up obvious challenges to class societies in producing, revising and adapting their rules and guidance to meet the differing technical demands of such a diverse group.

  • Gas ship with regasification facilities (which may work as a trading LNG carrier for periods of its life), conversion or new-build.
  • Storage barge with regasification facilities.
  • Near-shore, at-shore or at-sea locations.
  • Mooring systems, hull and mooring design for tidal conditions (potentially including grounding)

The much reduced operating costs (and potential for long term contracts) of an FSRU with respect to a trading LNG carrier can make conversion an attractive option for LNGC operators.

How is class supporting this market?

So where does class fit in this changing environment and how can it support innovative projects while not compromising on safety at any stage of the process?

Does the industry want class to come up with new prescriptive rules for these projects or should we utilise existing rules?

Before answering this, it is worth considering what is really being asked here and whoever you speak to you are likely to get a different answer.

Ask the operator what they want and the answer is likely to be a long term solution requiring minimal maintenance and lowest CAPEX. An obvious answer, but to achieve this you invariably look at site specific solutions that hope to achieve hull scantlings based on the site specific corrosion and fatigue characteristics and process plant that fully integrates both process and marine requirements under one philosophy.

Ask those that need to prepare tenders and costings for such facilities and the answer will be that they want a set of prescriptive rules that can be applied anywhere and cover the marine requirements only without the need to be site specific.

The above holds true for all offshore projects but become more acute when considering the complexity of offshore gas projects as we have to integrate gas containment into large floating structures for specific field requirements that also support very large process plants and that again are field specific. So how should class address these requirements that do not provide a comfortable fit with each other?

The view taken by LR is that new rules do not necessarily provide the most effective solution to highly focused projects, as they tend to deliver a more refined vision of prescription in an environment where the safest and most cost effective solutions can usually be found by allowing the developers a higher level of freedom when working on innovative concepts.

How can this be achieved? LR believes the core elements of its Offshore Rules provide a suitable foundation for offshore projects with the flexibility to be able to be applied over many concepts. This is then supported by written guidance for specific project types, for example near-shore and at-shore projects which cover many of the LNG related export and import terminal concepts being developed.

Another advantage of this is that by allowing developers scope to explore concept types in more depth, class can also support the process plant development and integration. Again, this is not by prescription but through support and support in the suitability and performance of the supply chain underpinning this.

Operational aspects - from a class perspective

The mantra of class is the ‘safety of life, property and the environment’ and the skill set that has been developed to support this is evolving to leverage the new inspection and monitoring technologies that are coming on stream. With these new technologies, comes the opportunity to look for new ways to achieve the goals of class in a way that provides operators with more information and less invasive methods. The outcome of this is that safety can be enhanced while at the same time, the impact on facility operations can be minimised and integrated into existing integrity management activities.

Data driven inspection and survey is perhaps the next evolution of class in operation and supports both prescriptive regimes and Risk Based Inspection (RBI) philosophies. We can expect to see a revolution in how we operate assets over the next few years and much of this will be driven by the change in the way we use data. The offshore LNG industry has so far been at the forefront of this development and this will likely continue as these processes evolve.

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