High costs for land-based LNG facilities are expected to push more companies toward more flexible, less expensive floating liquefaction (FLNG) plants as they bring natural gas supplies to market.

Those were the thoughts shared by Pangea LNG chief executive Kathleen Eisbrenner, who spoke during the Mayer Brown Global Energy Conference in Houston.

“We can do things much more efficiently and less costly than traditional thinking. A traditional receiving terminal may cost about $1.2 billion,” said Eisbrenner. “Or you can deliver a floating alternative for about $400 million, so one-third the cost—a substantial reduction. That is what has allowed a lot of countries to be able to afford it. But perhaps most importantly, especially here in the United States, is optionality.”

Currently, there are three FLNGs under construction; however, there are about 16 more projects under development, Eisbrenner said, noting eight of these are expected to be in the U.S. “Floating is going to be part of our future.” Other countries with such projects in the works include Australia, Brazil, Colombia, Indonesia, Israel, Malaysia and Papua New Guinea. Two projects also are slated for the Timor Sea.

By 2015, five more floating liquefaction projects could emerge, according to Eisbrenner. These areas include Mozambique and Tanzania, where massive amounts of gas resources have been found. U.S. Energy Information Administration data show Mozambique holds about 4.5 trillion cubic feet (Tcf) of proven natural gas reserves onshore and offshore, while Tanzania has about 230 billion cubic feet (Bcf).

Countries importing LNG doubled from 2000 to 2010, going from 11 to 22, figures presented by Eisbrenner showed. More than 10 years ago, none of the LNG-importing countries used floating regasification units. However, that changed after the first floating regasification site’s debut in the Gulf of Mexico in 2005. Now, there are 12 floating regasification sites, and that number could grow to 40 or so by 2015.

“We think it is possible to build single billion-dollar projects for modest amounts of LNG and be able to change the dynamics somewhat,” Eisbrenner said. She noted a new 4-million-ton LNG market can be created for about $400 million with floating infrastructure. “Liquefaction is 10 times as expensive [as regasification], 10 times as complex, 10 times more difficult, yet I think there is going to be a higher adoption rate associated with floating liquefaction than there has been with floating regasification.”

Costs and flexibility are big factors. Eisbrenner noted that perhaps only three companies in the world can afford $55-billion-type land-based LNG liquefaction plants.

While floating infrastructure has many benefits, there also are some concerns. The March 2013 floating production report by International Maritime Associates called the FLNG market sector “very young and uncertain.”

“There are a variety of technical and commercial issues that need to be successfully resolved before wide-scale viability of FLNG projects is established,” the report said. Some of these issues involve the FLNG topside plant size and weight along with limited use in sea environments due to vessel motion that impacts separation processes. Moreover, operation and maintenance costs are unknowns.

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