Oil & Gas Special Section | LNG
Anadarko’s Mozambique LNG project, if built, will be the first LNG project in the country.


Oil & Gas Special Section | LNG
Anadarko’s Mozambique LNG project, if built, will be the first LNG project in the country.


Welcome to the LNG Era
Projects around the world and how Alaska LNG stands up
By Tasha Anderson

s of late March technical teams from BP and ExxonMobil were scheduled to meet with Alaska Gasline Development Corporation (ADGC) representatives in Houston for a cost reduction workshop as a tool to increase the viability of AK LNG moving forward. The discussions were anticipated to start April 2 and involve at least twenty-five individuals.

This followed a March 8 announcement that AGDC signed an agreement with BP and ExxonMobil to collaborate on various methods to advance the project and improve its competitiveness.

And the project has competition.

According to Global Gas & LNG Outlook to 2035 by McKinsey & Company, a global market intelligence and analytics group focused on the energy sector, “South Asian gas demand is expected to grow by approximately 2 percent per annum by 2022, spurring LNG [liquid natural gas] imports by 20 billion cubic meters,” and over the next five years it’s anticipated Europe will require approximately 45 billion additional cubic meters of gas imports.

According to Shell LNG Outlook 2019, “Projections to 2035 estimate that more than 70 percent of energy demand growth will be met by gas and renewables combined, with gas supplying more than 40 percent of the additional demand.” The report continues to say, “LNG continues to be the fastest-growing supply
source… We expect growth in LNG demand to continue around the world, led by Asia and Europe.”

Demand for LNG will be met with new supplies of LNG, and AK LNG is only one of many prospective projects on the horizon taking advantage of the worldwide trend of producing and using renewable and cleaner energy sources.

LNG Canada
Just a little south and east of Southeast Alaska, LNG Canada, estimated to cost $31 billion, is currently under construction and is anticipated to begin supplying LNG before 2025. Project owners Shell (40 percent), PETRONAS (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent), and Kogas (5 percent) made the final investment decision to develop LNG Canada in October 2018.
Mozambique LNG’s initial construction plans are for production capacity of 12.88 million tonnes per annum of LNG.


Mozambique LNG’s initial construction plans are for production capacity of 12.88 million tonnes per annum of LNG.
Mozambique LNG’s initial construction plans are for production capacity of 12.88 million tonnes per annum of LNG.


LNG Canada CEO Andy Calitz said, “The final investment decision taken by our joint venture participants shows that British Columbia and Canada, working with First Nations and local communities, can deliver competitive energy projects. This decision showcases how industrial development can co-exist with environmental stewardship and indigenous reconciliation.”

LNG Canada is a LNG processing facility located in Kitimat, British Columbia, that will initially have two LNG trains (a natural gas plant’s liquefaction and purification facility, which is typically comprised of a compression area, propane condenser area, methane, and ethane areas) with the capacity to produce 14 million tonnes per annum (MTPA) of LNG.

In addition to building the LNG plant, construction includes redesigning an existing wharf at Kitimat to accommodate up to two LNG carriers at once and building a rail yard within the facility that will be connected to an existing rail system.

LNG Canada has contracted with TransCanada to build, own, and operate the 670-kilometer (415-mile), $4.6 billion Coastal GasLink pipeline to transport natural gas from the Montney basin, located northeast of Kitimat in British Columbia and Alberta. Construction began on the Coastal GasLink pipeline in January with anticipated completion in 2023. For most of its route the pipeline will be buried underground at a depth of about three feet; initially construction will include one compressor station to increase gas pressure to keep the gas moving through the pipeline, though up to seven compressor stations could be added along the line depending on future demand.

LNG Canada Development, Inc. will operate the facility.

According to LNG Canada, it will be up to each joint venture participant to provide its own natural gas supply, and each will then individually offtake and market its share of the LNG.

According to LNG Canada, this project “represents one of the largest energy investments in the history of Canada.” At peak construction, 4,500 people will be employed at the Kitimat site, and once completed there will be approximately 300 to 450 operational positions at the facility, though that would increase to 450 to 800 jobs if an optional additional two trains are built in the future. During the early days of operations, one specialist LNG ship will dock at the wharf every other day, increasing to approximately one ship per day at full build out, with an estimated 200 to 400 ships visiting the terminal every year.

Arctic LNG 2
PAO NOVATEK is one of the largest independent natural gas producers in Russia and engages in the exploration, production, processing, and marketing of natural gas and liquid hydrocarbons. According to NOVATEK, the company currently accounts for 9 percent of total natural gas production in Russia, totaling 68.8 billion cubic meters of natural gas production in 2018.

The company announced in early 2017 its plans to build Arctic LNG 2, a liquefaction terminal in Western Siberia, Russia, on the Gydan Peninsula. In December 2018, NOVATEK signed a $2.5 billion LNG platform engineering, construction, and installation contract with a joint venture between Saipem (an Italian energy contractor) and Renaissance (a Turkish services company). The three, nearly 100-foot-high platforms will be concrete gravity-based structures. According to an article published by 4C Offshore, a consultancy and market research organization that targets offshore energy markets, “In general, gravity foundations are designed with the objective of avoiding tensile loads (pulling/lifting) between the bottom of the support structure and the seabed. This is achieved by providing sufficient dead loads such that the structure maintains its stability in all environmental conditions solely by means of its own gravity.”

Also in December 2018, NOVATEK contracted with Nuovo Pignone (a part of Baker Hughes, a GE company), which will provide turbo machinery equipment for the project. Then in February, NOVATEK signed a contract with Siemens to provide compressor equipment for the three LNG trains planned for Arctic LNG 2; each train will be capable of producing 6.6 MTPA (for a total capacity of 19.8 MTPA) of LNG. The equipment contract includes three feed gas compressors and six boil-off gas compressors.

In late March, Sevmorput (a Russian, nuclear-powered vessel owned by Rosatomflot) delivered the first shipment of cargo to the Arctic LNG 2 project site at the Utrenneye field (estimated to have 1.98 trillion cubic meters of natural gas and 105 million tons of liquids). Crew members unloaded pipe, metal structures, containers, and construction equipment. Construction is slated to begin this summer, and it’s anticipated that Arctic LNG 2 will provide first LNG by 2023. The project is reported to cost approximately $25.5 billion.

“Projections to 2035 estimate that more than 70 percent of energy demand growth will be met by gas and renewables combined, with gas supplying more than 40 percent of the additional demand.”
—Shell LNG Outlook 2019
Arctic LNG 2 will be NOVATEK’s second LNG plant; the first, Yamal LNG, cost approximately $27 billion to construct and has an output capacity of around 16.5 MTPA. Yamal LNG has reached several milestones since opening in December 2017, including shipping 10 million tons of LNG as of February 4, 2019. The proven and probable reserves for Yamal are estimated at 926 billion cubic meters of gas, and construction of transportation infrastructure in relation to the project is ongoing.
Mozambique LNG
It’s expected that Anadarko Petroleum will announce a final investment decision for Mozambique LNG by the end of June, sticking to its development plan despite terrorist activities in the area and Cyclone Idai, which struck the city of Beira in Mozambique in mid-March and put more than 100,000 people in urgent need of humanitarian aid. Both Anadarko and ExxonMobil, which also has interests in the area, have donated funds for disaster relief in Mozambique, and after an attack in February in which one Anadarko employee was killed and several others were injured, the Mozambique government provided additional security for the 17,000-acre liquefaction complex construction site.
The 17,000-acre Mozambique LNG liquefaction complex site is located 600 miles north of Beira.


The 17,000-acre Mozambique LNG liquefaction complex site is located 600 miles north of Beira.
The 17,000-acre Mozambique LNG liquefaction complex site is located 600 miles north of Beira.


While “unexpected” is rarely a sought-after keyword in any industry development project, Mozambique LNG’s potential remains significant. Reserves in the Golfinho/Atum fields in Anadarko’s Area 1 deepwater block located 10 miles offshore are estimated at 75 trillion cubic feet, one of the world’s largest recent gas discoveries. Additionally, in February Anadarko announced LNG sale and purchase agreements with Tokyo Gas and Centrica for 2.6 MTPA until the early 2040s; CNOOC, 1.2 MTPA for thirteen years; Shell, 2 MTPA for thirteen years; Bharat, 1 MTPA for fifteen years; and Pertamina, 1 MTPA for twenty years.

If constructed, Mozambique LNG will be the first onshore LNG facility in the country, comprised of two initial LNG trains with a combined capacity of approximately 12.88 MTPA, meaning more than half of the capacity is already under contract for a minimum of thirteen years, which is just under the project’s goal to sell 9 to 11 MTPA of long-term contracts. “Mozambique will reserve some production capacity to sell on a spot and/or short-term basis, as well,” states the Mozambique LNG website.

The LNG park will be scalable, so that as demand increases total production for the project could be expanded to 50 MTPA. A consortium of CB&I, Chiyoda Corporation, and Saipem, known as CCS JV, was selected for the initial development of the onshore development. The scope of work includes the two LNG trains, two LNG storage tanks (each with a capacity of 180,000 cubic meters), condensate storage, a multi-berth marine jetty, and associated utilities and infrastructure.

Anadarko expects to construct the two initial trains at a cost of $600 per tonne, meaning the combined cost for the project comes in at about $7.7 billion (significantly lower than earlier estimates of $14 billion to $15 billion), and deliver first LNG in 2023-2024.

Brownsville LNG
There are three LNG projects on strikingly similar schedules all looking to build facilities in Brownsville, Texas.

It’s expected that there will be a final investment decision in 2020 on Texas LNG. If built, capacity for the project is 2 MTPA for Phase I, with potential for Phase II (to be constructed at a later date) to provide additional 2 MPTA of capacity. A pipeline to deliver gas to the project is already constructed and runs adjacent to the site.

FERC issued the project a draft EIS in October 2018, with the final EIS published in March. The Federal Authorization Decision Deadline is June 13, and the project anticipates it will receive a final FERC decision in the second half of this year. If built, production of LNG from Phase I of the project is anticipated to begin in 2023-2024.

Rio Grande LNG is being developed by Houston-based NextDecade Corporation. FERC issued this project a draft EIS in October 2018, and at press time the final EIS was expected from FERC in April, with a federal authorization deadline set for July 25.

It’s expected that Rio Grande LNG would create 5,000-plus jobs during construction and 200-plus operations jobs once the facility is complete. This project includes construction of twin 42-inch, 137.5-mile pipelines from the Agua Dulce area to Brownsville, as well as construction of three compressor stations, six mainline value sites, four metering sites, and other ancillary facilities.

The project is being permitted to include up to three LNG trains with a combined capacity of 27 MTPA, with a final investment decision slated for the third quarter of this year. Early estimates for the cost of the project were approximately $17 billion.

Annova LNG is making plans for up to six LNG trains at its proposed Brownsville facility, each capable of producing 1 MTPA. Other site facilities for this project include two storage tanks capable of storing 160,000 cubic meters of gas and one LNG carrier dock with mooring dolphins, access walkways, and a loading platform. There is space within the project’s footprint for additional facilities in the future to increase production including additional storage tanks, trains, and another docking berth.

The Annova LNG project, estimated to cost more than $3 billion, is also in the midst of the FERC process, anticipating it will be finalized by the third quarter of 2019, allowing the company to make a final investment decision by the end of the year. If the project stays on schedule, construction would begin in 2020 with first LNG production in 2023-2024.

And That’s Not All…
If all goes well, construction could begin on the $12 billion to $16 billion Louisiana LNG project, a 50/50 partnership between Energy Transfer and Shell in Lake Charles, Louisiana. Shell would act as the project’s construction manager and operator. The fully-permitted project would convert Energy Transfer’s existing Lake Charles import and regasification terminal into a LNG export facility with three LNG trains with a combined capacity of 16.45 MTPA. In March, the two companies signed a Project Framework Agreement to further develop the project and are “actively engaging with LNG engineering, procurement, and contracting companies with a plan to issue an Invitation to Tender in the weeks ahead,” according to a release from the project.

In July 2018, the Department of Energy issued a twenty-year license to Galveston Bay LNG, located in Texas City, Texas, to export up to 16.5 MTPA utilizing five LNG trains; the project would also include construction of an 85-mile pipeline that would supply gas from Katy Hub, west of Houston.

The Golfinho/Atum gas field, which will supply natural gas to Mozambique LNG, is located approximately 10 miles offshore.
The Golfinho/Atum gas field, which will supply natural gas to Mozambique LNG, is located approximately 10 miles offshore.


Shell finished constructing Prelude FLNG, the first floating LNG project, in 2017; it left the Samsung Heavy Industries shipyard in South Korea in June 2017 and was towed to Northwest Australia, where it was set in position in November 2017. After that, Shell “moved from construction into hook-up and commissioning and offshored more than 1,500 people to carry out the complex task of mooring Prelude to its home,” the company states. In June of 2018, gas was loaded onboard, which both allows the vessel to run on natural gas and test the liquefaction process. Prelude FLNG has a production capacity of 5.3 MTPA of liquids; 3.6 MTPA of LNG, 1.3 MTPA of condensate, and 0.4 MTPA of liquefied petroleum gas (LPG). Wells were opened in December 2018, which marks the “start-up, ramp-up,” or the initial phase of production where gas condensate is produced and moving through the facility. “Once this has concluded the facility will be stabilised for reliable production of LPG and LNG,” Shell states.
Not all of these projects are in direct competition with Alaska LNG (as some are targeting different markets or competing on a different scale), which for a quick comparison is currently estimated to cost $43 billion (though the ExxonMobile/BP/AGDC team is working to bring that number down) and will have three LNG trains with a combined capacity of 20 MTPA and an estimated projected startup of 2023-2025—but some of them are direct competitors, and this list does not include every proposed LNG project across the globe.

There’s no doubt about the rising demand for LNG in the coming years; the question remains which projects will manage to cross the finish line to meet it.