Transborders Australia (TBA) Director Daein Cha presented at the 2017 Society of Petroleum Engineers (SPE) Workshop “Floating LNG – Weathering the Challenges” (Kuala Lumpur, Malaysia) on the topic of “Define Development Cost Target & Minimal Functional Objectives to enable FLNG projects.”
Me Daein Cha discussed the following:
“To ensure that the development cost of the FLNG projects (and associated wells & SURF) remain globally competitive and resilient against commodity price fluctuations, we need to define per project an appropriate development cost target and minimal project functional objectives.”
“TBA proposes for the starting point of the cost target to be linked to the breakeven LNG price that new LNG projects considered in the USA are now targeting. This LNG price target will also need to be calibrated based on LNG shipping distance / fee differentials depending on the locations of the proposed FLNG project and the market / customers for which the LNG will be delivered to. TBA also suggests for a full project lifecycle economic assessment to be conducted in order to translate the breakeven LNG price into an equivalent development cost target specific to each project.”
“While such LNG price targets may require stringent requirements on initial CAPEX minimization, recent learnings and benchmarks suggest that the pursuit of such targets are achievable. However, this will require for key project stakeholders such as the gas resource owner, contractors and investors to carefully determine and align on the minimal project functional objectives, and to innovate and collaborate (technically, commercially, financially) for delivering projects true to its minimal objectives.”
The FLNG Workshop was attended by 56 delegates representing 27 organisations and 9 countries.