By OGJ editors
HOUSTON, June 23 -- Equatorial Guinea, Marathon Oil Corp. unit Marathon EG Production Ltd., and Equatorial Guinea'a national oil company Compañía Nacional de Petróleos de Guinea Ecuatorial (GEPetrol) have finalized all necessary agreements for the companies' Equatorial Guinea LNG project. These include the formation of Equatorial Guinea LNG Holdings Ltd. (EGLNG) and GEPetrol's 25% funding arrangements. Marathon is funding 75% of the project.
Natural gas for the project will be purchased from Alba field participants Marathon, Noble Energy Inc. and GEPetrol under a long-term gas supply agreement. BG Group PLC subsidiary BG Gas Marketing Ltd. (BGML) signed a purchase agreement with EGLNG last year for 3.4 million tonnes/year of LNG for 17 years from the liquefaction plant being developed by EGLNG, although the plant's capacity will exceed that (OGJ Online, May 19, 2003). BG will purchase the LNG on an fob basis with pricing tied to the US Henry Hub index. BG said the US would be the principal market for the LNG with the Lake Charles, La. receiving terminal the primary destination, but there is flexibility regarding LNG destination
The Federal Energy Regulatory Commission (FERC) has approved expansion of the Lake Charles import terminal to 1.2 bcfd. This first phase expansion is expected to begin in early 2006. BG LNG Services LLC (BGLS) reached agreements with Trunkline LNG and Trunkline Gas for a second phase expansion, subject to FERC approval, that would increase terminal send-out to 1.8 bcfd from mid-2006.
New liquefaction plant
The $1.4 billion liquefaction plant will be constructed on the northwest side of Bioko Island at Punta Europa, near Equatorial Guinea's capital city Malabo. Bechtel Corp, which will be primary engineering, procurement, and construction contractor, has been given a notice to proceed. Preliminary construction work began in December 2003, and work is progressing on schedule with site preparation, accommodation, equipment mobilization, and ordering of major plant components.
Feedstock gas for the plant will be sourced primarily from the Marathon-operated offshore Alba field where a new gas-condensate discovery has just been made under the currently producing sands (OGJ Online, June 22, 2004, see Exploration). Alba field holds estimated reserves of 400 million bbl of liquids and 4.4 tcf of gas, of which 3 tcf will be produced through the LNG plant under the BG contract.
The LNG plant will utilize the Phillips "Optimized Cascade" process. Key plant facilities will include refrigeration systems, compressors, condensers, two LNG storage tanks, and marine facilities that will allow for the berthing, mooring, and loading of both membrane and spherical design LNG ships having 90,000-160,000 cu m capacity.
Complementary operations
The participants in the Alba field, in which Marathon holds a 63% interest and serves as operator, recently completed the Phase 2A natural gas condensate expansion project that will increase total liquids production to 59,000 b/d from 20,000 b/d.
In addition, Alba Plant LLC, a joint venture company owned 52% by Marathon, 28 % by Noble, and 20% by Guinea Equatorial Oil & Gas Marketing Ltd. (GEOGAM), is expanding its liquefied petroleum gas (LPG) production capacity. With all major equipment installed, the Phase 2B LPG expansion project is expected to start up by yearend or early 2005. Upon completion of Phase 2B, gross liquids production is expected to increase to 79,000 b/d from 59,000 b/d.
About 120 MMcfd of dry gas remaining after condensate and LPG are removed is supplied to the existing Atlantic Methanol Production Co. LLC (AMPCO) methanol plant on Bioko Island where it is used to manufacture 2,700 tonnes/day of methanol. AMPCO is a JV owned 45% each by subsidiaries of Marathon and Noble, and 10% by GEOGAM. All remaining dry gas will be returned offshore and reinjected into the Alba reservoir for later production when the LNG plant is completed.
