FLNG Forum : FLNG Role Within The LNG Value Chain ?

• Where are the Opportunities ?

• What are the Gas Supply Challenges ?

• What are the Project and Commercial Benefits ?

• Who are the Key Players ?

• How Could Domestic and Export Needs be Addressed by an FLNG Project ?

LNG Global Congress 2012

London, 29 June 2012

Claudio H. Steuer

Principal

SyEnergy Limited

claudio.steuer@SyEnergy.co.uk

LNG Global Congress 2012

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A brief word about SyEnergy…

• Energy consultancy focused on strategy, business development and commercial issues

• 25+ years of experience with Shell, ENI, Snamprogetti, Centrica, and Gas Strategies Group

• Advised clients on energy projects located in West, East & North Africa, South America, USA,

Europe, Caspian, Indonesia and Australia.

• Upstream and midstream gas/LNG business development and commercialisation

• Gas supply planning, infrastructure development, domestic and export gas market studies

• Project contracts, sales & purchase agreements, price reviews, and dispute resolution

• Advice and implementation support focused on long term sustainable value creation

• Independent project assurance reviews and commercial due diligence

• Provision of bespoke energy training

3

Where are the FLNG opportunities ?

4

Deepwater fields where subsea pipelines are

expensive, technically and/or politically complex

?

?

FLNG Congratulations

5

Pacific Rubiales Shell Prelude

FLNG Projects

6

Source: Hoegh LNG, Shell, BG, LNG Business Review

FID achieved

FID achieved

FID achieved

USA Gulf - Excelerate – On-going FEED

FLNG is not resource constrained

7

FLNG project complexity is not a function of size… most often it is

proportional to the lack of alignment between all stakeholders

Source: EIA / IEO 2011, WoodMac, ENI World Oil & Gas Review 2010-11

Brazil pre-salt, a new frontier…. new challenges

8

Source: ANP, HRT, Petrobras

• Total area of 149,000 Km2 (~300-350km off the coast)

• Only 2% of Brazilian sedimentary area

• Only 28% of the area under concession

• ~50 Billion Boe potential… ~40 Tcf natural gas

• ~7,000m of saltwater, sand, salt layer & rock

• Well engineering (salt layer, ~granite hardness, 1,000

psi, High CO2, water/gas injection)

• Flow assurance (near freezing temperatures, paraffin deposition, hydrate and scaling control)

• Production (depth and pipeline thickness, shifting ocean currents, marinisation of remote production systems)

• Remote operations at depths that would crush a submarine require complex technological systems

• A dry hole can cost ~$150 – 200 million

FLNG project challenges

9

Source: Wood Wood Mackenzie, ICIS Heren Global LNG Markets, LNG Business Review

Ichthys Project FID @ a reported $4,000/tonne ! Project Sponsors

Feasible Project

Return on Investment

Operating Environment

Resource Holder

Government Take

Domgas Development

Local Content

Financial Community

Legal & Fiscal Stability

Sustainable Development

Robust Cash-Flow

People

Process Projects

Quality front-end planning

anticipating key issues and

developing durable solutions

LNG Plant Liquefaction Cost Evolution - $/tonne

Global Gas Prices - $/Mmbtu

A new business model ?

• “Insanity = doing the same thing over and over again expecting different results”

• “Information is not knowledge. The only source of knowledge is experience”

• “You miss 100% of the goals you do not kick the ball”

• “A good hockey player plays where the puck is…. a great hockey player plays

where the puck is going to be”

• “Creativity is thinking up new things. Innovation is doing new things”

10

Source: Luis Steuer/Albert Einstein, Wayne Gretzky, Theodore Levitt

Gas flaring… from waste to opportunity

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Source: World Bank GGFR, BP Statistical Review of World Energy 2010, GE Energy, NNPC

• ~145 Bcm/yr flared or ~2.3 mmbbl/d or ~3% of production

• ~33% of European consumption ~ $56 bn @ $10/mmbtu

• Nigeria - 22 Mtpa LNG in ~10 years

Energy policy, investment decisions and industry

governance need planning & consistent rules

Gas & LNG floating solutions

12

Source: Hoegh LNG, EnerSea, Sea NG, Transocean

• LNG Tankers and FSRU are well established

• FLNG is in post Shell Prelude mode… “design

one, build many”… where is the next one ?

• When will ~1-2 Mtpa FLNGs start to occur ?

• Marine CNG should find good applications

in complementing offshore production

systems, gas gathering and floating

production systems, including FLNG

• Refrigeration & pressure have improved CNG

compression ratios from 250:1 to 450:1

• Utilization of composite materials increases

the possibilities to transport raw gas

• Delivery system commercial feasibility

estimated up to ~2,000 to 3,000 km

FLNG LNG Tankers

FSRU

CNG

Floating CNG producer & shuttle ship

13

Source: CNG Gas FPSO and CNG Shuttle ship designs provided by SeaNG Corporation

Floating CNG producer & shuttle ship

14

Source: CETech Producer and CNG Shuttle ship designs provided by Höegh LNG AS

Floating CNG producer & shuttle ship

15

Source: Neptune Gas Technologies Ltd. ship designs provided by BMT TITRON (UK) Ltd.

Marine CNG applications

UPSTREAM

• Increase Existing Oil Production (remove gas handling constraints)

• Enable New Oil Production (provide associated gas solution / flare reduction)

• Connect Satellite or Marginal Fields (floating gas gathering system)

• Connect Remote Area / Deep-water Fields (substitute expensive submarine pipelines)

• Production from High Sulfur, H2S, CO2 Fields (transport raw gas to gas treatment plants)

• Compliment LNG Production (additional gas supply to LNG on-shore or FLNG)

• Early Production / Extended Well Testing Large/Giant Fields (temporary gas solution)

MIDSTREAM / DOWNSTREAM

• Transport Raw Gas (offshore platform or onshore gas treatment plant)

• Sale of Treated Gas (regional / niche markets / switching from liquid petroleum fuels)

STRATEGIC

• Stranded Gas Monetisation (accelerate reserve bookings and increase production)

• Leverage Unique Solution (entry into new fields)

• Gas Supply to LNG Plants with Unutilised Capacity (tolling gas to increase equity LNG)

16

What role could marine CNG play in Brazil ?

17

Note: SyEnergy estimate for Lula, Iracema, Guara, Iara, Jupiter, Parati, Caramba, Carioca, Bem-Te-Vi, Mexilhao, Franco, Sabia & Libra fields

• Campos & Santos fields* hold ~42 billion barrels

of gross recoverable oil reserves and ~40 Tcf of

gas reserves (~25 Tcf associated)

• Marine CNG could complement pipelines on the

~5-6 Bcf/d gas gathering system

• Marine CNG offers complimentary synergies for

connected or remote FLNG production systems

• Marine CNG could provide additional gas supply

to major cities and power plants along the coast

• Injection into existing coastal pipeline system

reducing need/costs of compression stations

• Short travel distances to areas with limited

infrastructure unlocking further CCGT growth

• Opportunity to supply regional gas demand

Marine CNG increases gas supply to FLNG

• Scalability (adaptable to production profile ramp up and down)

• Flexibility (variable production rate and storage needs on-shore / on-boat)

• Re-deployability (relocation/repositioning within field, basin or another geography)

• Shorter Development and Deployment Schedule (improved time-to-market & economics)

• Lower Overall Capex $/mmbtu than Alternatives (competitive cost / market price)

• Lower Overall Opex $/mmbtu than Alternatives (attractive market price / supplier margin)

• Wider Portfolio Application (“design few models and build many” – standardization of solution)

• Enable Monetisation of Previously Stranded Hydrocarbons (increase reserve bookings)

• Simpler, Faster and Less Capital Intensive Development of Receiving Terminals / Buoys

(able to reach larger number of smaller markets and improved value creation for both parties)

18

Thank You !

LNG Global Congress 2012

London, 29 June 2012

Claudio H. Steuer

Principal, SyEnergy Limited

claudio.steuer@SyEnergy.co.uk