OREANDA-NEWS. September 12, 2014. China National Offshore Oil Corp. (CNOOC) is in the preliminary stages of designing its first FLNG vessel and is scouting for offshore gas fields in which to use it, according to the project’s manager.

China’s main offshore energy explorer has been slowly getting to grips with FLNG technology, said Li Da, a manager at the CNOOC Research Institute in charge of large-scale FLNG feasibility projects. CNOOC is working with foreign engineering companies to design complex components and functions – such as cargo containment, LNG and LPG output, pre-treatment and liquefaction, and single-point mooring – Li told Interfax on Tuesday at an LNG technology summit in Shanghai. The company’s main research plan involves the study of vessels that can tap fields with reserves of 10-20 billion cubic metres and 30-100 bcm, according to Li.

The CNOOC Research Institute has signed a contract with French engineering company Technip to conduct feasibility research into building an FLNG vessel offshore China, said Wang Dangbao, project director at Shanghai Richtech Engineering – which has worked extensively with CNOOC on offshore projects. But Li denied any contract had been signed. “FLNG is an important part of CNOOC’s strategic plan and we have been in touch with many foreign companies. [But] it is still too early for us to settle [a] contract with any.” Design work on China’s first domestic FLNG processing facility was completed in April by the CNOOC Research Institute, CNOOC Gas & Power, the China University of Petroleum, and Tianjin University, CNOOC said in a news release in April. The unit – still in a pre-production, experimental stage – has a designed processing capacity of 20,000 cubic metres per day, with “a high degree of automation [and] quick start-stop performance characteristics”.

Construction and pre-commission checks will be finished in September. Testing of the unit will take place in October at an LNG plant in the city of Yingkou in Liaoning, which will provide feedstock gas and electricity for the unit. No FLNG vessels are operational, although Exmar and Colombia’s Pacific Rubiales are looking to start up their 0.5 mtpa Caribbean LNG project in mid-2015. That vessel is under construction in China’s Jiangsu province by a marine and offshore subsidiary of Wison, a major Chinese engineering group. Malaysian national oil company Petronas is also working on two FLNG projects – the 1.2 mtpa PFLNG 1 is slated to launch in late 2015, followed by the 1.5 mtpa PFLNG 2 by late 2016. But it is Shell’s Prelude facility that is the most talked-about development.

At an estimated cost of USD10.8-12.6 billion, the vessel represents a major gamble on cutting-edge, untested technology. Project partners include Japan’s Inpex, South Korea’s state-run Kogas and Taiwan’s CPC. There has been speculation CNOOC could use FLNG vessels to tap small or stranded gas fields in the South China Sea, which is claimed in its entirety by China and in part by Vietnam, Taiwan, Brunei, Malaysia and the Philippines. There are potentially enormous oil and gas reserves at stake for China and the other claimants beneath the sea. Although the territorial disputes mean little exploration has taken place, CNOOC said in November 2012 that the area may hold around 14 trillion cubic metres of gas resources. Typhoon-proofing Any FLNG plants in the South China Sea will need to withstand typhoons and tropical storms, which frequently occur in the region during summer.

“CNOOC cannot solve the technical problems for using FLNG in the South China Sea caused by rough weather in the region. The ships cannot work when waves are higher than 2.5 metres, because the [FLNG vessel and LNG carriers] will be too close to each other,” Wang told Interfax. “This means the ship can only work 70% of the time in this region, meaning the project is not feasible. It is debatable what Technip can do to solve these problems.” Li acknowledged China’s coast would present a difficult operating environment for FLNG plants, as five to seven typhoons strike the country every year. But he argued FLNG technology is more economically feasible for tapping remote gas fields than laying undersea pipelines when distances from shore are greater than 400 km. He also pointed out that FLNG avoids any need for onshore facilities that would require expensive land purchases, and provides flexibility as the vessel can be moved to a different field.