The location and nature of the Scarborough natural gas field off Western Australia mean the project will be "very challenged from a cost point of view," Mark Nolan, ExxonMobil's vice president for Middle East and Australia, said Monday.
The remote Scarborough field was discovered in 1979. It lies in the Carnarvon Basin, 180 miles (290 km) off the coast in 3,000 feet of water.
Scarborough contains very dry gas, so there are no liquids to improve the economics of the development, Nolan told reporters on the sidelines of the Australian Petroleum Production and Exploration Association's annual conference in Brisbane. The field is also shallow and broad, so it will require expensive deepwater horizontal drilling, he added.
Despite the challenges, ExxonMobil "hopes to make [Scarborough] a viable project," Nolan said.
The US major and partner BHP Billiton recently sought Australian federal government approval to install the world's largest floating LNG production facility at Scarborough. The two oil and gas industry heavyweights each own 50% of the field.
The FLNG project would process around 1.1 Bcf/day of gas, producing an estimated 6 million to 7 million mt/year of LNG from five trains, ExxonMobil said in its application to Australia's Department of Sustainability, Environment, Water, Population and Communities.
The vessel to be deployed and permanently moored at Scarborough would be a massive 495 meters long, bigger than the 488 meter FLNG facility currently under construction in South Korea for Shell's Prelude project in Australia's Browse Basin.
Prelude became the world's first FLNG project to reach a final investment decision in May 2011, and is expected to start producing 3.6 million mt/year of LNG from 2017.
The Scarborough FLNG project is currently in the pre front-end engineering and design phase. The project is expected to progress to the FEED stage in 2013 and to a final investment decision in 2014-2015, ExxonMobil said in its application to the government.
The development would involve the drilling of 12 wells in two phases, starting with seven over the period from 2018 to 2019. Offshore installation and commissioning of the FLNG facility would be expected to occur in 2019 and 2020, with production starting in 2020-2021.
In addition to the gas treatment and liquefaction facilities, the vessel would be fitted with up to 10 storage tanks inside the hull, with an on-board storage capacity of around 380,000 cubic meters. Around 80-110 cargoes would be offloaded from the facility each year.
ExxonMobil has spent around four years "systematically qualifying" the technology for its FLNG facility, Nolan said.
Since Shell approved its Prelude project, FLNG production technology has steadily gained traction in the Asia Pacific region. In June, Malaysia's Petronas approved an FLNG facility off Bintulu that it expects to get into production prior to Prelude's startup.
The Australian government has also already approved what would be Australia's second FLNG facility, the Bonaparte project off northern Australia which is being pursued by GDF Suez and Santos. That project has yet to reach a final investment decision, but is targeting a go-ahead in 2014.
