Santos and GDF Suez have abandoned their multi-billion dollar plan to develop three natural gas fields offshore Australia by utilising innovative floating liquified natural gas (LNG) technology capable of converting gas into liquid at sea.
The pair has been entertaining the idea of building a floating LNG facility to extract gas from the Petrel, Tern and Frigate gas fields in the Bonaparte Basin since 2010, when GDF Suez paid Australian gas producer Santos up to US$370 million to join the project and own 60% of the three gas fields.
However, high costs and competition from North America and Russia have forced both partners to consider other potential development options in addition to the floating LNG concept, including a pipeline connection to Darwin.
“While the partners firmly believe the fields have material value, having been fully appraised, their future development using floating LNG technology, although technically robust as demonstrated during extensive pre-FEED studies, does not currently meet the companies’ commercial requirements,” it says in the media release by Santos.
According to the article on the Wall Street Journal, the technical issue of designing a liquefaction and storage system that can cope with the movement of the ocean was another major reason why Santos and GDF Suez have opted to pull the plug on the floating LNG project and turn their attention to a more conservative approach.
Bonaparte LNG was expected to produce between two million and three million metric tons of LNG each year and deliver first production around 2019.