Despite the global LNG industry’s current struggles, there’s a new technology that offers investors a nice profit opportunity.
You see, infrastructure has become a major roadblock for LNG.
Basically, it’s expensive to build out the LNG infrastructure, which includes terminals that liquefy natural gas for export, ships that transport the refrigerated gas, and receiving plants that convert natural gas back to its normal state.
But what if there were a technology that could combine much of that infrastructure into one neat package?
Well, for the first time, there is.
The technology is being developed by Golar LNG (GLNG), a company controlled by Norwegian billionaire John Fredriksen, the preeminent player in energy shipping.
The One-Stop LNG Shop
Golar’s development is called a floating liquefied natural gas vessel, or FLNGV.
The vessel can produce, liquefy, and store natural gas, and can be easily moved from spot to spot. In essence, it’s an offshore rig that can move from one cheap, stranded (inaccessible) natural gas field to another.
And it’s cost-efficient, too, mainly because Golar isn’t building the vessels from scratch. Instead, the company is converting some of its aging fleet of LNG tankers (a sore point with investors for years) to this new type of vessel.
Golar has asked Singapore’s Keppel (KPELY) to convert one of its old Moss LNG carriers into an FLNGV, and it’s expected to be ready for production in the first quarter of 2015. The vessel will be capable of producing two million metric tons of LNG annually, and it will have 125,000 cubic meters of storage space.
On top of that, Golar plans to convert two more Moss carriers in the coming years.
Now, this technology may look similar to the Prelude vessel being built for Royal Dutch Shell (RDS-A). But there are a few key differences: Golar’s vessel is far more mobile, and its price tag is about one-tenth of the cost.
The Start of Something Big in LNG
FLNGV offers a promising future for the LNG industry, even with all of its recent ups and downs.
After all, the vessel creates a cheap way to tap into some of the world’s most inaccessible natural gas fields (of which there are many).
In fact, Shell believes there are at least 300,000 billion cubic feet of natural gas lying in inaccessible offshore fields. Until now, these small gas fields have been ignored by energy companies because the traditional method of reaching the gas and converting it to LNG was far too expensive.
But Golar’s FLNGV technology should change all of that. In fact, it could soon be drawing parallels to 1977, the year that the first floating oil production vessel was built.
And “the chase” continues,