Monetizing Stranded Reserves: The Role of Floating LNG

Nwaoha, Chikezie (Petroleum Africa)


As the world's population grows and economies develop, the demand for energy will continue to grow significantly. This increased demand is also being underpinned by the desire for cleaner source of energy to minimize impact on the environment. The International Energy Agency and many others predict that the world's total energy demand will grow by about 35% in 2030 from today's level.  Crude Oil and Natural gas are estimated to account for nearly 60% of total energy supply through 2030 for a number of reasons. The growing attractiveness of  global Natural gas development also supports the general consensus and forecast that Natural gas will overtake oil towards the middle of the century as a primary energy source. Natural gas is also being used in a variety of processes as feedstock, fuel, etc. Its contribution to world energy resources is growing leading to the concept that it is a bridge to the ultimate hydrogen economy. The flexibility brought about by growing importance of liquefied natural gas, LNG, is also changing the dynamics of the natural gas supply and demand equilibrium. The massive growth in global LNG demand and the challenging supply constraints are putting pressure on the industry to think of more innovative ways to harness and monetize stranded gas fields in a cost-effective and creative manner. Some schools of thought believe that as much as 40% or more of the total global gas reserves is stranded and needs to be brought to market creatively. Such stranded gas resources, found in deep offshore acreages and such remote locations are typically isolated from onshore processing facilities and may not be profitably developed by conventional means. This creates the niche application for the Floating LNG technology as creative way of monetizing the resources. The majority of the world's stranded gas reserves are located in the CIS (30%) and the Middle East (25%). Africa was third, with 16% of the reserves, and was followed by the Far East (13%), Latin America (13%), Alaska (5%) and Australasia (3%). The top-five countries for stranded gas are Russia, Iran, Nigeria, Saudi Arabia, and the Alaskan North Slope in the U.S. This paper seeks to identify and emphasize the role and contribution of floating LNG as a more effective way of having access to and monetizing stranded reserves and associated gas, in an environmentally responsible manner safely. This paper also reviews the current status of FLNG projects, to highlight the technical and commercial obstacles that still confront them, and offer insight into how these obstacles might be overcome.


Keywords: Floating LNG, Stranded Reserves, Natural Gas, Liquefaction