Delfin LNG and Golar will team up in the Gulf
Delfin Midstream and Golar LNG (ticker: GLNG) signed a joint development agreement yesterday to develop the Delfin LNG project.
Delfin LNG is a proposed project that would utilize floating liquefied natural gas vessels to export LNG, instead of land-based projects like Cheniere’s (ticker: LNG) Sabine Pass. If completed, Delfin will be the country’s first floating LNG project.
Delfin plans to park four FLNG vessels about 50 miles off the coast of Cameron Parish, Louisiana, right on the border of Texas and Louisiana. Delfin purchased the offshore UTOS pipeline from Enbridge in 2014 to supply the project. As UTOS only runs to the West Cameron Block 167, about halfway to the proposed site, Delfin has also leased the HIOS pipeline that will transport gas directly to the project location.
Each FLNG vessel will have a capacity around 3 MTPA, giving a total project liquefaction capacity of 13 MTPA, or 1.7 Bcf/d. If increased output is desirable, the project can be expanded to 21 MTPA.
Delfin offering increased flexibility in contracts
Delfin LNG appears to be representative of the larger trend of LNG projects. Pressure from a new “buyer’s club” between Korean, Japanese and Chinese LNG buyers is forcing changes in new contracts. Instead of long-term contracts that include “destination contracts,” buyers are pushing for more flexibility. Delfin is advertising itself as able to offer just such terms, with contract durations of 10-20 years instead of 30, and several different types of pricing indexes available.
Golar LNG will provide the FLNG vessels for the Delfin project. Golar is currently developing its new design for FNLG, which will be utilized by Delfin. FID for Delfin LNG will take place in 2018, with first gas delivered in either 2021 or 2022.
Golar focuses on LNG vessels
Golar LNG is an LNG midstream company, with a focus on constructing vessels for all stages of LNG. The Golar fleet is comprised of 26 vessels, split between LNG carriers, floating storage and regasification units and floating liquefaction vessels. Golar owns 16 LNG carriers, with a total capacity of over 86 million cubic feet. Floating storage and regasification units are essentially the reverse of FLNG vessels, FSRUs take LNG from carriers and warm it until it is a gas again. Golar is currently in the process of converting an LNG carrier to a FLNG vessel, and plans to draw from this experience in designing ships for Delfin.
