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Producers no strangers to LNG projects Major Alaska North Slope companies — BP, ConocoPhillips, ExxonMobil — have substantial liquefied natural gas investments worldwide Bill White Researcher/writer for the Office of the Federal Coordinator
BP — Trinidad, Australia, Indonesia, Abu Dhabi, Angola: 22 trains
BP’s first LNG plant opened in the 1970s. Its latest started up in 2013. In between, its LNG plants have under gone a steady pace of expansion.
That’s a different trajectory from ExxonMobil’s almost lightning burst onto the LNG scene with Qatar.
But BP and ExxonMobil’s stories share some similarities.
Like ExxonMobil, BP can trace some of its roots to the Standard Oil. The London-based company absorbed Sohio in 1987 and Amoco in 1998 — they were the Ohio and Indiana arms of the old Standard Oil, respectively.
Like Exxon in its Mobil merger, BP picked up an LNG project with its Amoco merger.
Trinidad and Tobago Amoco was nearing completion of its Trinidad and Tobago LNG plant when it merged with BP. The plant opened in 1999. Today BP’s share of Atlantic LNG’s four trains at Point Fortin, Trinidad, is its single biggest LNG play. The fourth train started in 2006. The partners have talked about adding a fifth train.
Australia In the 1980s, BP became one of six partners in the North West Shelf project, the father of Australia’s LNG industry. Gas production began in 1985, supplying locals in Western Australia. LNG exports began four years later when the first train began production. Four more trains were added over the years — the latest in 2008. Plant capacity now is 16.3 mtpa — about 2.2 bcf a day — roughly the same as is proposed for Alaska.
Indonesia BP also owns a piece of a mega-plant in Indonesia, the Bontang plant. Bontang’s capacity is 22.3 mtpa, or 3 bcf a day.
BP holds a minority interest in VICO — Virginia Indonesia Co. — a 1970s wildcatter that struck what became the Bontang feed gas while drilling for oil, a familiar turn of events in the annals of petroleum prospecting.
VICO owns 20 percent of Bontang, which started production in 1977, added a train the 1980s and expanded four times in the 1990s. BP much later acquired VICO in a joint venture with Italy’s Eni.
Another Indonesia LNG plant is the only one BP operates. It’s called Tangguh. It opened in 2009 can produce 7.6 mtpa, about 1 bcf a day. A key customer is China, but the gas also goes to South Korea, Japan and even Mexico. For several years BP has discussed adding a third train to Tangguh.
Abu Dhabi BP’s first LNG investment occurred in the Middle East.
It occurred at a time — the 1970s — when British relations with the region and with BP were complicated and evolving. Abu Dhabi gained its independence from British rule in 1971. But the British government ruled BP as principal stockholder until it started divesting shares in the late 1970s.
In the meantime, newly christened Abu Dhabi needed revenue and its leaders asked sharp questions about all the natural gas flaring at oil wells. This sparked the LNG export idea, and BP became a 10 percent investor.
The plant was the world’s first Middle East LNG project.
The national oil company, ADNOC, is majority owner of the three-train, 5.6 mtpa Das Island plant — about 750 million cubic feet a day.
The plant’s initial customer was Tokyo Electric Power Co., also a charter customer of the Kenai LNG plant in Alaska circa 1969. TEPCO’s willingness to sign a contract with a Persian Gulf LNG maker, 7,400 miles away — twice as far as Alaska, more than that from other suppliers in Brunei and Indonesia — stretched the boundaries of what was possible in the LNG world.
Angola BP’s ownership share of Angola LNG’s $10 billion-plus plant is 13.6 percent. The plant sputtered to a start in 2013, more than a year behind schedule due to glitches at the plant, its gas fields and pipelines. In late 2013, the plant was still ramping up toward its nameplate capacity of 5.2 mtpa — about 700 million cubic feet a day.
Angola has substantial oil production. As with the Abu Dhabi plant and assorted others around the world, ending natural gas flaring was a catalyst behind Angola’s push into LNG. The development is the country’s priciest single project ever, according to Angola LNG.
With plants spread across the world, BP is positioned to market LNG to customers around the globe, whether it’s production from its own plants or production it buys and sells on the market. For example, BP contracted to buy Train 2 output from an LNG plant proposed for Freeport, Texas, a project in which it holds no equity interest.
ConocoPhillips — Alaska, Australia, Qatar, three trains ConocoPhillips has the longest LNG history among the three Alaska North Slope producers.
It pioneered the Asian LNG trade with exports from its Kenai LNG plant in 1969, liquefying nearby Cook Inlet methane — not gas from Prudhoe Bay, which had just been discovered hundreds of miles to the north. This plant stopped producing in fall 2012 for lack of a reliable Cook Inlet supply. ConocoPhillips is mulling its options for reopening the plant.
The Phillips side of ConocoPhillips led the company’s move into LNG.
Phillips Petroleum Co. was the major investor in the Kenai LNG plant. And it took the lead in the next project, a 3.4 mtpa plant — 450 million cubic feet a day — that opened in Darwin, Australia, in 2006.
Phillips and Conoco merged in 2002, when the Darwin project was well afoot. Conoco, by the way, same as ExxonMobil and BP, can trace its own genealogy to Standard Oil: Conoco sprang from Continental Oil and Transportation Co., a western U.S. fuel marketer that Standard Oil controlled until the U.S. Supreme Court ordered it divested.
ConocoPhillips’ third LNG plant, Qatargas 3, started up in 2010. It’s a one-train behemoth with a 7.8 mtpa capacity — 1 bcf a day. Only five other LNG trains in the world can match that size, all in Qatar and all commissioned in 2009 or later.
On the import side, the company is part owner, with Qatar Petroleum and ExxonMobil, of an LNG-receiving terminal in Texas. The Golden Pass terminal opened in 2010 to coincide with startup of Qatargas 3. But with ample U.S. shale gas production, Golden Pass mostly has stood idle. Qatar and ExxonMobil want to add liquefaction equipment so Golden Pass can make and export LNG.
ConocoPhillips has a 37.5 percent stake in the 9 mtpa — 1.2 bcf a day — Australia Pacific LNG project under construction in Gladstone, Australia. The two-train plant is expected to open in 2015.
ConocoPhillips liquefaction technology That plant, as well as two more that other companies are building in Gladstone, will use ConocoPhillips’ liquefaction technology. A Cheniere Energy LNG plant under construction in Sabine Pass, La., also will use the technology.
Among operating LNG plants, ConocoPhillips’ plants in Alaska and Darwin, Australia, use the technology as do other companies’ plants in Trinidad and Tobago, Equatorial Guinea, Egypt and Angola.
ConocoPhillips’ method is a distant No. 2 to those of Air Products and Chemicals Inc., a Pennsylvania company with an 82 percent market share of the liquefaction plant business, according to the International Gas Union, a trade group.
“However, ConocoPhillips’ Optimized Cascade technology is growing in usage and makes up just under half of projects that have reached FID (final investment decision) — all of which are located in the United States or Australia,” the IGU said in its “World LNG Report 2013” publication.
The company’s technology market share should double to 21 percent by 2017, the IGU forecast.
Part 1 of this story ran in the Nov. 24 issue of Petroleum News.
Editor’s note: This is a reprint from the Office of the Federal Coordinator, Alaska Natural Gas Transportation Projects, online at www.arcticgas.gov/north-slope-producers-no-strangers-lng-projects.
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