Malaysian national oil company (NOC) Petronas is nearing the completion of its first pioneering floating LNG (FLNG) unit, the PFLNG 1, facility, which is due onstream by year-end. At the same time the NOC’s second and larger unit—PFLNG 2—being done in partnership with Murphy Oil also is well underway in terms of its construction program.

PFLNG 1 (also known as PFLNG Satu) will be moored over the Kanowit gas field 180 km (112 miles) offshore Sarawak, Malaysia, and has been designed to produce up to 1.2 million tonnes per annum (mtpa) of LNG as part of Phase 1 of the Kumang Cluster Development. Scheduled for commercial startup early in 2016, PFLNG 1 is both on time and on budget—an impressive achievement for a project that represents such a bold step forward in terms of offshore technology development for its owner.

PFLNG 2, meanwhile, is destined to be commissioned during 2018 and initially employed and centered on the deepwater Rotan gas field in Murphy-operated Block H, 130 km (81 miles) offshore Sabah, Malaysia. It also is planned to receive gas in later phases from at least four other satellites in the block—Alum, Bemban, Buluh and the recently revealed 5.7 Bcm (200 Bcf) Permai Field. Murphy holds a 56% interest in Block H, with Petronas owning the remaining stake.

PFLNG 2 milestone
Petronas and Murphy recently ticked off a key milestone in the latter project’s progress with the official steel cutting taking place at the Samsung Heavy Industries (SHI) shipyard in Geoje Island, South Korea. SHI is responsible for the engineering, procurement, construction, installation and commissioning of the unit along with its consortium partners JGC Corp. and JGC (Malaysia) Sdn. Bhd.

The hull and topsides of the PFLNG 2, which has a design capacity of 1.5 mtpa, will weigh 152,000 tonnes in total. The facility, which will be operated by Petronas, is expected to achieve a 10-year peak gas rate of approximately 5.9 MMcm/d (207 MMcf/d) gross, according to partner Murphy.

In a prepared statement, Datuk Abdullah Karim, vice president and venture director of LNG domestic projects for Petronas Refinery and Petrochemical Corp., said the NOC’s decision in January 2014 to make its final investment decision on the PFLNG 2 project was made with “the expectation for PFLNG 2 to embark on a technology solution to monetize a wider range of stranded gas fields when it is commissioned in 2018.”

Dual strategy
The company’s strategy for both FLNG units is simple: to prove them initially on their first selected fields and then move them around to exploit other remote stranded gas fields in Malaysia’s domestic waters. Interestingly, it also has indicated it will consider potentially leasing the FLNG units to other companies to help them unlock their own stranded gas resources, and not only within its own waters.

Once onstream, the two FLNG plants will raise Malaysia’s total LNG production to an estimated 28.9 mtpa.

Much responsibility rests on the shoulders of the first unit, therefore, and Petronas has been heavily involved in essentially micromanaging the PFLNG 1 project so that it stays on schedule and on budget and has exemplary safety performance. In March the operator achieved 12 million man-hours without any lost time injury since the project kicked off exactly three years earlier at the Daewoo Shipbuilding & Marine Engineering (DSME) shipyard in Okpo, South Korea.

Decade-long process
When the 365-m-long (1,198-ft-long) facility starts commercial production in first-quarter 2016, it will be the culmination of a process that started a decade earlier, when the FLNG concept was first seriously considered by Petronas.

After initial conceptual studies starting in 2006 confirmed the technical and economic viability of the proposed solution to Petronas, an engineering, procurement, construction, installation and commissioning contract for PFLNG 1 was eventually awarded to the DSME-Technip consortium in March 2012. The consortium partners had previously
carried out the FEED work on the facility after being awarded that contract in late 2010. Virtually all the engineering and procurement activities for the project have been done in Malaysia.

The facility consists of 22 modular systems including gas treatment, liquefaction, storage and offloading systems, with the liquefaction system to convert the gas to liquid at a temperature of -162 C (-260 F), which reduces the volume of the gas 600 times.

The FLNG vessel will be powered 100 MW of electricity using natural gas as the source and will weigh in at 132,000 tonnes in total. Petronas said it also has been careful to put in place a “more robust than usual” operational system so it will need less frequent maintenance than what is normally expected for an onshore plant—the company already has eight existing onshore LNG trains.

Other innovations have included the use of nitrogen as a refrigerant, which Technip said gives easier operability and which is a world-first for this capacity. DSME, for its part, also recognized that due to the large volume of work created by the PFLNG 1 project (as well as several other large offshore projects it was working on simultaneously), it was necessary to fabricate more topsides modules using subcontractors, including DSME’s own subsidiary yards.

Big sister
The unit’s big sister, PFLNG 2, will be sited on the Rotan Field offshore Sabah. Discovered in early 2007, this field lies in 1,150 m (3,773 ft) of water and was the first find made in the block. Operator Murphy has since discovered seven fields within the permit, with Rotan itself estimated to hold recoverable reserves of around 26.9 Bcm (950 Bcf) of gas.

The nonpropelled unit will, like its smaller sister, be moored using an external turret and be designed to operate for 20 years without drydocking. JGC is looking after the engineering and procurement of the topside LNG facilities, with Air Products supplying its proprietary AP-NTM LNG process technology and associated equipment. In addition, GE Oil & Gas will supply two nitrogen trains incorporating a pair of aeroderivative gas turbines in mechanical drive mode to cool the gas to a
liquid state as well as four gas turbine generator systems.

SHI, which is constructing the hull and modular facilities, said that the keel-laying ceremony for the vessel at its Geoje yard is currently on schedule for this December. The hull is expected to be launched in April 2016, and integration works are planned to get underway by July 2016. The American Bureau of Shipping will be providing classification and statutory certification services for the vessel.

Industry interest
According to Adnan Zainal Abidin, Petronas’ vice president of global upstream LNG projects, even though the first facility has not yet left the dock, it has been attracting inquiries from multinational companies about the possibility of chartering it.

But the first priority, he said, is to prove the technology successful by monetizing the gas from the Kanowit and Rotan fields before embarking on any other commercial ventures. “Our priority is to prove our worth, and hopefully this will open doors for us. We have already been approached by multinational companies to use our floaters for one of their fields, but for us the focus is to get this out of the shipyard and have it commissioned and run successfully.

“Once we’ve done this, we can show the world this thing is happening,” he added. “I have no doubt in my mind this will lead to other commercial opportunities beyond Malaysia.”

PFLNG 1:

Location: Kanowit gas field

Hull Size: 365 m (1,197.5 ft) in length by 60 m (197 ft) in width by 33 m (108 ft) in depth

Capacity: 1.2 mtpa

LNG Storage Capacity: 177,000 cu. m (6.3 MMcf)

LNG Offloading: Cryogenic marinized loading arm

FLNG Mooring: External turret mooring

Loading: Side by side

Water Depth: 70 m to 200 m (230 ft to 656 ft)

Design Life: 20 years

Inlet Design Pressure: 942.7 psi

Accommodation: 100 to 150 personnel

PFLNG 2:

Location: Rotan gas field

Hull Size: 381 m (1,250 ft) in length by 64 m (210 ft) in width by 31 m (102 ft) in depth

Capacity: 1.5 mtpa

LNG Storage Capacity: 177,000 cu. m (6.3 MMcf)

LNG Offloading: Cryogenic marinized loading arm

FLNG Mooring: External turret mooring

Loading: Side by side

Water Depth: 500 m to 1,500 m (1,640 ft to 4,921 ft)

Design Life: 20 years

Inlet Design Pressure: 942.7 psi

Accommodation: 100 to 150 personnel

South Korean JIP

Cutting development expenditure is the upstream industry’s dominant focus at present, and a new joint industry project (JIP) led by DNV GL is aimed specifically at helping Southeast Asian fabrication powerhouse South Korea reduce project costs by up to 15%.

DNV GL said variations in owner, operator and regulatory requirements during engineering and construction phases at South Korean shipyards present a huge challenge for operators and drive up costs.

The JIP with the country’s heavyweight players Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries is aimed at establishing a new international standard for offshore oil and gas projects. DNV GL predicts that the results through improved standardization could potentially cut project costs by approximately $500 million on a typical tension-leg platform project, for example.

Initial components focus
The JIP will initially focus on simple components and equipment such as tertiary structures and bulk materials for construction, piping, and electrical and instrumentation engineering.

Next year the JIP will be extended to complete modules and equipment packages. The project will consider industry standards, company standards, and maritime rules and approaches for standardization as all methodologies will be reviewed to ensure the most effective and efficient means are applied.

The JIP is supported by the Korea Offshore and Shipbuilding Association and the Korea Marine Equipment Research Institute, and other oil companies and engineering firms are welcome to further join the project.

Arthur Stoddart, DNV GL’s regional manager for Korea and Japan, said in a press release confirming the JIP’s launch that unfamiliar specifications and processes were resulting in rework, delays and misunderstandings, adding thousands of engineering hours to projects. “The implementation of a standardized approach will be an opportunity to significantly reduce
the general cost level of offshore projects without compromising quality or safety,” he said.

15% potential savings
Stoddart added that the full cost of a TLP project is “typically around $3.5 billion. Although the project partners have not yet published estimates, we at DNV GL expect to see savings in the region of $150 million to $250 million for this type of project, which is up to 7% of the total project cost. The full standardization potential is more than 15% of the project cost.”

Aside from improved standardization helping to reduce design periods and minimize design changes, JongBong Park, senior executive vice president and COO of HHI’s offshore and engineering division, said in the JIP launch release that other potential benefits would include reduced material costs resulting from lower material purchase, manufacturing and testing expenses. A shortening of the material purchasing lead time would be expected as more materials could be held in stock. Surplus materials could also be used in other construction projects, he added.