Cheapest LNG project in the world

[jft310]

The history of the Super Majors at oil bottoms is they have cut to much but that over cutting preserves their dividend . When things turn and they will the Super Majors know before others . Look for a large acquisition to mark the bottom . No Interoil is not a large acquisition target .
Macquarie thinks Interoil needs to complete Ant 4 and 6 before anyone would take a stab at them .
Meanwhile the assets to feed the lowest cost new build LNG plant should command a premium price because of that then access to the low cost project .

[Palm]

And I agree with that, and feel Total will sit still for at least that long before doing anything further. They have enough to do getting people moved to PNG/Singapore, finishing drilling and assessments, doing project engineering, etc.

Hession's talk with MS where he said he was then "in talks" with possible buyers means to hit his 6-month target he will have to bring home a deal yet this year. Should Tri prove to be another "giant" after all testing, then they might have a shot at that target. I'm just not going to bet on it.

[sageo]

And I agree with that, and feel Total will sit still for at least that long before doing anything further. They have enough to do getting people moved to PNG/Singapore, finishing drilling and assessments, doing project engineering, etc. Hession's talk with MS where he said he was then "in talks" with possible buyers means to hit his 6-month target he will have to bring home a deal yet this year. Should Tri prove to be another "giant" after all testing, then they might have a shot at that target. I'm just not going to bet on it.

Palm - While I agree with your"Total sitting still " for a while,another thought crossed my(maybe feeble) mind . I'm not trying "to beat a dead horse" (I apologize if it sounds that way) but if you have time,please read my post to My 2 cows under the post "Expert says Gulf has more than PNG LNG". Imho PRL 39 ( at this time Tricera only) will wind up with at least 3 tcfe in their overall lease . I know MH has stated 1 and maybe 2 tcfs,but I humbly believe that is conservative. If this turns out to be true, would you care to speculate on Exxon maybe wanting to use this source for their train 3 expansion ? .....or do you think they will simply wait on the P'ynyang gas .[ from what I can tell from some of our older maps,we still have in ppl475's SW quadrant 4 great dinosaur prospects so we wouldn't be giving up all of our"goodies" to the west of Antelope or PRL 15 . { ps...if someone asks if I'm willing to bet on it, please respond that I already have.....fortunately or unfortunately] . Have a pleasant evening.

[jft310]

The slides in very small print show the T estimates were done in March 2015 , my guess is Laurie Brown who has the credentials accumulated over 35 years to make these estimates had a verbal comment from Hession. He stated the estimates were conservative they were mid case estimates .
Will be interesting ...

[steve3752]

We all know that oil prices and LNG prices are linked.  However, they are different products with different cost to produce.  There is no law that says LNG prices have to be linked to oil prices.

I would hope it bodes well for IOC that demand for LNG is projected for moderate continual growth and we are closer to the main markets than US producers and have a lower or lowest cost to produce.

The price of oil is not the only factor for IOC to prosper.

If LNG is needed it will be bought first from the lower cost producers and it appears that is us.

At some point if you need LNG, the price of oil will not be so relevant because you need LNG, not oil.

What do others think about if future LNG prices will be less linked to oil?

[Palm]

As the LNG industry continues to mature LNG will become independent of oil IMO. It's going to take more projects coming online, but eventually there will be futures traded widely like oil has been for a long time.

[Putncalls]

LNG is already refined. When figuring the BTU based value you have to add the refining cost for the barrel of oil. With that perspective an MCF should cost about (barrel + ~20)/6.

[admin]

As the LNG industry continues to mature LNG will become independent of oil IMO. It's going to take more projects coming online, but eventually there will be futures traded widely like oil has been for a long time.

Agreed. However, those that wanted decoupling from oil (basically the Asian importers) are not nearly as keen now. Still, LNG will slowly become a more 'normal' commodity with a more unified price.

[Palm]

Sageo, with all that is going on in PNG currently it's obviously the place to be. We have PNG LNG up and running, PRL 15 closing in on Certification in early 2016, drilling going on at Wahoo, drilling and planned drilling in TBR, P'nyang getting ready to be drilled in early 2016 (and Santos recently added to that license), Repsol getting involved in the west and Kina drawing interest from both OSH and Total in the license area adjacent to EA due to it being "of interest with Papua LNG" having been announced.

What will pop first as far as PNG LNG expansion is tough to guess. But what we want to happen at lightning speed these SMs do much more methodically. These projects produce for 20-30 years and they know they must develop them at lowest cost and feed demand as it's perceived.

With Santos having been admitted to P'nyang recently, it's safest to assume train 3 will come from there. We can scream about mountains and cost, but overall it's seen by that partnership as the best way to fill the pipeline they've all paid for. Exxon is calling the shots there and they don't make many mistakes. But then what? PNG LNG supposedly is good for 4 or 5 trains and it seems their license areas are having problems providing much of anything. Assuming P'nyang fills that subsea pipeline, how will building out/expansion of Papua LNG coincide with further expansion of PNG LNG? No way to know now.

Hession said in the MS piece that there are 2 in PNG now; Total and Exxon and they both need more gas. Wahoo seems the best possible answer for PNG LNG but there will be just one well there for a good while. If it hits can Hession get a deal with PNG LNG partnership that makes him happy? Seems tough to me knowing Exxon's ways. Wahoo now would be perfect for Papua LNG expansion also. Could see some creative partnerships happen Wahoo-way.

Then we have TBR, again it needs a good bit of appraisal development to get max price. The tie-back feature makes it most suitable for Papua LNG, but how soon does Total think it's needed/available. Hession mentions Tri as being fairly small but others think it could be a super-giant. Only one way to know. Several more wells.

I think a bit of this will plod along at industry pace and not IOC-shareholder lightning speed. Would love to be surprised but SMs didn't get where they are and stay by making decisions like small resource companies do. They don't have to gamble. They wait to keep risks lower in a high risk industry.

As usual we have to wait and play their game and conserve cash wherever possible to keep from getting desperate. That's my take.

Use or flush. HAGD Sageo

[Stavros]

Phil Mulacek and Henry Aldorf were a few years ahead of the industry when they pushed for FLNG vessels sitting at a jetty offshore the Gulf Province.

Fast forward to 2015 ... TOTAL has a fully developed FLNG concept ready to build.
http://www.total.com/en/energies-experti...oating-lng

Golar is building three FLNG vessels, one of which is available to a buyer for 2018 delivery.
http://www.golarlng.com/index.php?name=seksjon/Stock_Exchange_Releases/Press_Releases.html&pressrelease=1940318.html

Let's see one or two FLNG's show up to process E/A or TBR gas!