CNG Developer Sea NG Costs Out Offshore Solution

By Lucy Hines - Tradewinds, London

Marine compressed natural gas (CNG) developer Sea NG has revealed costings that details how its vessels could be used to monetize stranded gas fields as it attempts to persuade energy companies to consider CNG as an alternative to LNG.

Speaking at the Floating LNG 2011 conference in London, Sea NG president and chief operating office David Stenning said of the companies C84 capacity Coselle-based vessels could be used as the floating CNG (FCNG) unit to handle 350 million standard cubic feet per day (cbf/d) of gas production, equating to around 2.5 million tonnes per annum (mtpa).

Making public Sea NG’s project estimates on FCNG for the first time, he said that at current shipyard pricing the 234-metre long, 46-metre beam vessel would cost about $211m.

Stenning, whose company is racing several other CNG outfits to bring a solution to market, added $70m to this as the estimate for the turret and STL mooring system, plus a further $15m for the tandem offloading arrangement to come up with a capital expenditure (capex) for the unit of $296m. He added compression and processing costs, depending on gas composition, at $350m, giving a total capital and operating cost for the FCNG unit of $621m

He estimates the FCNG vessel’s operating cost at around $242,900 per day, while operating expenses (opex) on the C84 shuttle vessels – priced at a total of $422m [fleet of two] – required to serve it would stack up at $86,100 per day.

While Stenning’s calculations do not include fuels or field costs, such as crew changes, he says the US dollar per million standard cubic feet (Mscf) of production price on the unit would be $0.70.

Distance from production to market will determine the number of shuttle tankers required with who needed for a 100-kilometre trip and five distances of 1,000 kilometres. Including the process FCNG unit, he says this would give a US dollar per tonne per annum (tpa) figure ranging from $417 per tpa for the two-ship solution to $670 per tpa for the five vessel. He points out that this compares to published costs of some floating LNG solutions of $1,000 per tpa, some of which do not including shuttle-tanker costs.

Stenning admits the investment in shipping is high for CNG but points out that it does not require the expensive liquefaction plant that LNG needs. He says that while FCNG produces half the density of gas over LNG – the C84 would hold the equivalent in gas of 7,000 tonnes of LNG – he argues it can do it at half the cost.

He admits that costs for CNG shipping continue to rise with distance to market and ultimately FLNG will become more economical. However, he says energy companies looking to develop stranded gas reserves that are at 2000-kilometres distances should consider CNG as a solution.

Sea NG is partnered by shipping owner Teekay, Japanese trader Marubeni and Canadian pipeline giant Enbridge on its coiled design for marine CNG transport.