Watching The World: Japan floats new ideas

Jan. 12, 2009
The Japanese are floating ideas that may create waves in the oil and gas industry.

The Japanese are floating ideas that may create waves in the oil and gas industry. No, we are not talking about seaweed again. This time, it’s facilities to produce LNG at sea.

Does that sound odd? Well, for starters, the idea could ease a host of problems, including rising resource nationalism in countries such as Indonesia which is threatening Japan’s supply stability.

According to Akira Ishikawa, chief economist of Japan Oil, Gas, & Metals National Corp., interest in the concept of floating production, storage, and offloading facilities for LNG is likely to increase amid “supply-demand shifts for natural gas and the rising cost of land facilities due to environmental concerns.”

Underlining the practicality of the LNG FPSO concept, Ishikawa notes that floating platforms will lead to more stable procurement by visiting smaller fields—usually ignored due to low profitability.

According to reports, industry players have identified more than 130 undeveloped gas fields in the Asia-Pacific region alone. Altogether, those fields contain estimated reserves of 80 tcf, enough gas to satisfy Japan’s LNG import needs for 20 years.

And many Japanese think that floating LNG facilities are the best way to tap those fields.

Japanese ‘scrambling’

In fact, Japanese firms are now said to be “scrambling” to win orders for mobile facilities to produce LNG at sea.

In July, Chiyoda Corp. set up a unit of 15 senior engineers to design the world’s first FPSO facilities for LNG.

Chiyoda hopes to shop the concept to Royal Dutch Shell, which is looking to tap fields off Australia and is thought likely to purchase FPSO blueprints from either Chiyoda, JGC Corp., or a French firm.

IHI Corp. which has been applying proprietary technology for stabilizing LNG carriers for the development of LNG FPSOs, has signed a licensing agreement with Samsung Heavy Industries Co. IHI expects to work on five midsize platforms and two large ones annually in 2010-15.

Meanwhile, Inpex Corp. plans to develop FPSO platforms for the Masela Block in Indonesia’s Timor Sea. The goal is to start producing 4.5 million tonnes/year of LNG beginning in 2015—all to be shipped to Japan.

Inpex also is considering the idea, for cost reasons, at Australia’s Ichthys gas field, which is likely to cost more than 2 trillion yen to develop—three times more than earlier projections.

This increase is due mainly to a government ruling that the LNG plant must be located far from the ecologically sensitive field area.

Gas hydrates, GTL

But don’t think the FPSO concept is restricted to LNG. Mitsui Engineering & Shipbuilding Co. is developing a mobile platform for producing natural gas hydrates.

Then, too, Toyo Engineering Corp., Modec Inc., and others are cooperating to develop an FPSO facility to produce gas-to-liquid fuel by late 2010.

In Japan, when they talk of floating new ideas, they mean business.