Dave Edwards Senior Advisor / Field Development Team Lead
Dave Edwards is a technical advisor and project manager with diverse global experience delivering major upstream Oil and Gas projects. Dave has extensive experience in...
Nigeria has very significant natural gas resources, estimated to be the ninth largest in the world at nearly 200 trillion cubic feet (TcF) and the largest in sub Saharan Africa. A substantial portion of this gas is non-associated, and much of it has been discovered offshore, in shallow water and near existing infrastructure over the past quarter century. Despite this abundant resource, and the potentially low technical cost of the gas, Nigeria has yet to fully benefit from its development.
These gas volumes have remained undeveloped for multiple reasons – not least of which has been the absence of a robust domestic market, the lack of regional gas export opportunities and the, historically very understandable, priority given to handling associated gas through the world-class Nigerian Liquefied Natural Gas (NLNG) facilities at Bonny Island.
Endeavor Management’s Expert Advisory Group (EAG) has been working with its clients to help find solutions, which will unlock these undeveloped gas volumes, with concomitant economic and environmental benefits and in doing so, has identified a number of fundamental insights, which are broadly applicable. These gas volumes can become economically robust (and their development will significantly improve Nigeria’s carbon footprint) because they have several competitive advantages, namely:
EAG has advised clients on how to best leverage these competitive advantages to achieve best practical overall system cost and cycle time for LNG developments, particularly through the adoption of Floating LNG (FLNG) technology, which is now maturing rapidly. The first FLNG vessel, PETRONAS Satu, achieved first production in mid 2017. Production from the second, Golar Hilli Episeyo, is imminent, and Shell’s Prelude vessel will commence production before the end of 2018.
EAG’s advice has used widely available decision support tools guided by experienced industry professionals (a team of client staff and EAG). The main thrust of the advice has been to:
Having used this advice, and their own insights, our clients have found that the most important factor in monetizing their gas resources, is to have real competition between development solutions. This has been made possible by the rapid maturation of the FLNG industry, wherein cycle times from investment decision to first production have already been reduced from 6 years (Prelude) to 4 years (Golar Hilli), and where, with replication and simplification, further reductions are in reach. Furthermore, large reductions in unit CAPEX, measured in $/million tonnes per annum (MTPa), from the first FLNG systems have also been achieved. The latest FLNG systems may achieve CAPEX as low as $600-700/MTPa. This, together with the cost-effective use of existing upstream assets (upgraded where necessary) means that FLNG is now a highly credible competitor for the monetization of Nigeria’s non-associated gas resources, and provides the competitive environment that gas resource holders have previously lacked.
In summary, EAG’s clients are now in position to be either among the first (if not the first) Nigerian operators to select FLNG for their offshore non-associated gas developments, and to do so ahead of competing onshore LNG expansion projects, or to be able to secure reasonable terms and access to existing assets, such as NLNG, because of the existence of FLNG as a credible competitor. It also means that Nigeria can soon expect to see significant growth in its natural gas production, starting in the early 2020s.