fishermans landing - lng ltd analyst report

An observant WCL s/h alerted me to this new research report on LNG Ltd.

Link is below - it is a good read.

I have extracted the bits I could find which mentioned the F/L project.

IMHO, it still makes sense for a Petro/LNG arrangement with WCL.
The economics of the LNG Ltd technology seem to be compelling.
When the capital costs of the LNG Ltd technology are so low comparatively, $70m already spent on F/L (PLUS the $42m spent by Petro acquiring MPO assets next door), many approvals already in place, site prepared, design and costing of modular plant already completed, offshore construction, and now courtesy of Magnolia, the template for documentation, process and pricing of agreements such as Tolling etc have been developed.

So given that the pricing of LNG from a F/L project should be competitive, plus all the above, one would think that that would give the F/L stakeholders better room to move in coming to an arrangement with a gas supplier ???!!!

IMHO, what the Chinese require generally is an acceptable "comfort level".

They lost that with the govt regulation fiasco at NSW level and Federal level.

Now those govt issues seem to steering towards some sort of resolution- and Qld is better than NSW.

The other issue with Petro was probably a "comfort" issue re Meridian field production and development plan.
We now see that production is improving, there has been confirmation that the field is good (just need to get technology right), we have new and experienced mgt in place, getting new production staff - and importantly, evidently the Validation Report is completed, and appears to "validate" the ability of the field to produce the gas required to satisfy a buyer.

So just maybe the Petro scenario ain't quite over?

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FOCUS RESEARCH PAPER

http://www.lnglimited.com.au/IRM/Company/ShowPage.aspx?CategoryId=190&CPID=1938&EID=34584949

LNG Ltd progressed its technology sufficiently well to enter into a Heads of Agreement Gas
Supply with Arrow Energy to develop a 3mtpa LNG Project at Fisherman’s Landing at
Gladstone Qld using Arrow’s CSG reserves as the gas feed. However, Arrow Energy was
taken over by SHELL/PetroChina in 2010 prior to conclusion of Project contractual
arrangements with Arrow so an alternative development JV was entered into with Huanqiu
Contracting and Engineering Corporation (HQC), a 100% subsidiary of China National
Petroleum Corporation (CNPC). Changes to NSW gas development policies have limited
access to a previously proposed long term gas supply so the project is currently on hold.
LNG Ltd's current major project is now the Louisiana-based Magnolia LNG plant.

Fisherman’s Landing 3mtpa LNG Project
This project commenced in 2007 and A$70m was spent on development including permits
and Gladstone Harbour dredging studies and approvals. In August 2011 LNG Ltd was granted
Pipeline Licence 161 to construct a 21km pipeline from the Callide Infrastructure Corridor to
the site. The project is still live but has been written off in LNG’s accounts.

LNG Ltd will have the value of the OSMR technology where licensing fees have now been
agreed and also the value of the Gladstone Fisherman’s Landing LNG Project. These are
quantifiable at about US$50m by 2018 in the short term but could be very much larger in the
future should LNG Ltd, or other parties, develop a new project on similar or better terms
than Magnolia LNG.
LNG Ltd should also benefit should the Fisherman’s Landing Project at Gladstone receive a
rejuvenation through a confirmed supply of gas.

The OMSR technology patented by LNG Ltd offers a significantly lower capital and operating cost
avenue into LNG production and can now allow new smaller entrants to stand beside the big
players in this major growing market. This technology could become a global winner.

FISHERMAN’S LANDING PROJECT
KEY POINTS

» Well located at Gladstone Harbour
» Major pipelines within 20 km delivering gas to other Gladstone LNG projects
» Project has a pipeline licence to connect to Fisherman’s Landing
» Offtake agreements can be arranged for 3mtpa LNG
» Gas supply arrangements awaiting clarification
» Tolling arrangements would guarantee fee of about US$3.00/Gj

The Fisherman’s Landing site located in the Gladstone Harbour already has substantial
infrastructure, including Jetty #5, in place. The shipping channel requires only minimal
harbour deepening and its south side Gladstone Harbour location gives much lower
infrastructure costs than the other Gladstone Harbour projects which are all over on Curtis
Island on the northside of the harbour.

The site is only 20km from the Callide hub which includes the Jemena 627km Queensland
Gas Pipeline from Wallumbilla to Gladstone and Rockhampton. Jemena is the result of the
aggregation of power stations, pipelines and services from several major companies (Alinta,
United Energy, Agility, Duke AGL etc) into a A$9bn utilities ( power, gas and water) asset
company with 2500 employees and >2000km of pipelines and is wholly owned by Singapore
Power.

The Project is based on the OSMR technology and two 1.5mtpa LNG trains
The LNG Ltd’s OSMR technology is an evolutionary development of three non-LNG but
standard proven technologies into a highly cost-effective process. These simple standard
technologies provide lower capital and operating costs and better fuel efficiencies. The
project footprint is small and compression/liquefaction units are modular.

Capital costs include LNG liquefaction plant and on site storage tanks. The pipeline (from
the Callide gas hub) and infrastructure, including dredging, are only a minor part of the
project.
Operating costs, excluding gas used in the LNG plant under the tolling model, and
maintenance (O&M) costs (~US$0.60/Gj) would cover a 24/7 staff of about 30 persons.

LNG plant design incorporates compression and liquefaction components that can be
imported from construction facilities offshore. On site construction activities will be limited
to site layout infrastructure and a 180,000 m3 LNG storage tank. The estimated Capital cost,
supported by previous detailed engineering by SKEC ( in 2009/10) and in 2013 by the
Company’s major shareholder in HQC is US$1.1 billion with guaranteed 1.5mtpa from the
first train, with a nameplate capacity of 1.9mtpa.
Fisherman’s Landing can be recommenced within a short timeline once a secure source of
gas can be established