Page 10 - NorthAmOil Week 30

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LNG boom benefits contractors
GLOBAL
MCDEMOTT International is upbeat on pros- pects for the LNG sector, noting progress on the Cameron LNG and Freeport LNG projects – in the nal stages of starting up – in addition to future work such as on Mozambique LNG. It also announced a contract win on the Ichthys eld development, in Australia.
Publishing its second-quarter results, the company said cash used by operation activities had reached $205mn during the second quarter, largely as a result of its use of cash on the Cam- eron LNG project. This work has been more complicated than originally thought, although the service company has renegotiated its deal with the operating consortium. is rejigged deal provided McDermott with $110mn in “pro- gress incentives” during the quarter.
e additional incentives were agreed with the Cameron LNG backers in early July. is is made up of two portions, with $75mn to be paid this year and the remaining $35mn in 2020. There is also scope for additional payments, which would be likely to come next year.
Cost estimates on Freeport LNG also increased, with McDermott reporting a $38mn charge.
Both projects are more than 90% complete, the company’s CEO, David Dickson, said in the conference call. Although McDermott did not provide earnings guidance for 2020, the o cial did say that there should be a “sharp reduction and eventual elimination on zero margin reve- nues from our existing project portfolio as we complete the Cameron and Freeport LNG pro- jects”. He went on to describe them as the “two big remaining issues” in the company’s work portfolio.
Cameron LNG reached first LNG pro- duction, from Train 1, in mid-May. Projected exports from the three-train plant are 12mn tonnes per year (tpy). Feed gas has also been introduced into the rst train at Freeport LNG, with a rst cargo anticipated this quarter.
Up next
e company is positioned for the next phase of LNG construction, though. As part of this, it was awarded the engineering, procurement and construction (EPC) contract – with Saipem and Chiyoda – on Anadarko Petroleum’s Mozam- bique LNG work. e US company reached nal investment decision (FID) on the liquefaction plant in June.
Dickson commented that McDermott had the right to increase its work in the project to 45% until June 2020, which would carry a pro- jected value of an additional $1.6bn.
McDemott also reported that it had begun EPC work on the Tortue LNG project in Mauri- tania and Senegal for BP during the quarter.
Future anticipated work for the service com- pany in the sector includes a potential “mega
contract” for Australia’s Scarborough field, a medium-sized LNG project in North America and a “signi cant amount of module work” on the Arctic 2 LNG project.
Down under
McDermott, in partnership with Baker Hughes, a GE company (BHGE), said it had won con- tracts to provide umbilicals, risers and owlines (URF) and subsea production systems (SPS) for the Scarborough project. is work will begin in 2020 and be completed in 2023.
e undersea facilities will be tied back to the existing central processing facility (CPF), with water depths of 240 to 270 metres.
“McDermott’s alliance with BHGE is a com- bination of two leaders in subsea development. McDermott’s majority share of this award is a testament to our expertise in executing large and complex subsea EPCI projects. Our experi- ence will ensure delivery during the next phase of this key gas eld development,” said McDer- mott’s senior vice president for Asia-Paci c, Ian Prescott.
BHGE’s regional vice-president, Graham Gil- lies, said the exible partnership model would “deliver improved project economics and cer- tainty for Ichthys LNG”.
e $45bn Ichthys LNG plant shipped its rst cargo in October 2018. It has two trains, capable of producing 8.9mn tpy. e project is largely focused on exports to Japan.
BHGE also published its second-quarter results this week, noting that around 60mn tpy of capacity had been approved since the end of 2018, and that the gure was on track to reach 100mn tpy this year. “We remain well positioned across multiple market segments, most impor- tantly LNG, as more projects move towards pos- itive FID this year,” said the company’s CEO and chairman, Lorenzo Simonelli.
In particular, BHGE reported its Turboma- chinery & Process Solutions (TPS) orders were up 32% year on year. Equipment orders were up 117%, driven by higher LNG and produc- tion orders.™
Additional incentives were agreed with the Cameron LNG backers in early July.
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w w w . N E W S B A S E . c o m Week 30
01•August•2019