With the goal of becoming the market leader in technology for mid-scale liquefied natural gas projects (LNG), LNG Ltd. (LNGL) has set its sights on mid-scale LNG projects in the range of 1.0 to 3.0 million metric tons per year (MMmt/y). Its Gladstone LNG Project at Fisherman’s Landing in Australia is showcasing the technology.

“We believe we have a competitive advantage in our patented technology, which will enable us to achieve this objective. The LNG processing technology, or optimized, single-mixed refrigerant (OSMR) as it is known, can also be scaled up to larger LNG train sizes, producing major cost and efficiency benefits for LNG,” said Maurice Brand, managing director and joint chief executive officer, LNGL.

“Our aim is to showcase this important strategic technology and the company’s capabilities through the delivery of the Gladstone LNG Project at Fisherman’s Landing,” he emphasized.

LNGL began construction of the LNG facility in October 2009. However, six months later, the project was put on hold while the company secured new sources of natural gas supply. Construction can start again once the gas supply for the one-train, 1.5-MMmt/y plant is nailed down.

The company has taken a three-pronged approach to arranging its gas supply. The first involves aggregating gas supply from the Wallumbilla gas hub near Roma, Queensland.

“In August, we announced the commencement of the interim front-end engineering and design (FEED) study with Jemena for the expansion of that company’s Queensland Gas Pipeline (QGP) from Wallumbilla to Gladstone,” he explained. “This is currently the only gas pipeline to Gladstone. The timeline for the pipeline upgrade will allow gas to be supplied to Fisherman’s Landing in late 2014 for the first train and in late 2015 for the second train.”

As the second part of the plan, a gas hub will be established at Callide, which is 21 km west of Gladstone. Between 2013 and 2018, up to six new pipelines will bring gas to the Gladstone region. LNGL has a pipeline license (PPL 161) to bring gas from Callide to Fisherman’s Landing.

Finally, the plan calls for a gas hub in Ipswich, west of Brisbane. The Ipswich hub would be capable of receiving gas from suppliers in northern New South Wales, such as Metgasco Ltd.

If those plans work out, LNGL expects to restart construction in the third or fourth quarter 2012. The LNG construction time will be 30 months from finalizing gas supply and gas delivery agreements. “There is still a small window of opportunity to have the LNG project commissioned by the end of 2014, although it’s more likely to be the first quarter 2015,” Brand stated.

What will make the project successful, according to the company, is the OSMR technology. He listed primary benefits as reduced costs and improved efficiencies.

“The technology allows us to capture the low capital expenditure benefits of smaller projects and combines this with delivering the higher efficiencies of the larger LNG projects. For example, in terms of higher efficiencies, the amount of gas used in the LNG process and plant is 30% less than for traditional projects and the capital expenditure required on plant and equipment is less than half that used on the major Curtis Island (Gladstone) LNG projects,” Brand explained.

LNGL is working with Chinese partners in all aspects of the project from gas supply to LNG delivery.

The company’s major shareholder and strategic partner is China’s Huanqiu Contracting & Engineering Corp. (HQC), a wholly owned subsidiary of China National Petroleum Corp. (CNPC).

“HQC is supporting LNGL to secure gas supply and, through CNPC and its affiliates, proposes to purchase LNG from the first LNG train. HQC is also working with us to arrange project financing,” Brand said.

HQC has a vision is to become a leading global LNG engineering, procurement and construction (EPC) contractor, he continued.

“Having a strong technical and financial partner such as HQC is critical for LNGL in the delivery of the Gladstone LNG Project on Fisherman’s Landing. We see them as a partner in all aspects of the project delivery,” he emphasized.

HQC is also willing to support LNGL financially, as demonstrated by its participation in a recent share placement, which resulted in HQC becoming the majority shareholder. HQC is also providing technical support with the completion of the FEED study.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.