GoM most likely LNG import site

Gas prices hovering between $3 and $3.30 will keep LNG cost-competitive, said Jim O'Sullivan, senior vice president at Technip-Coflexip. Supply of LNG is ample, he said during the Fifth Rice Global Forum on Engineering and Construction in Houston, and demand exists. The number of proposed LNG plants far exceeds the forecast demand for LNG, he noted, so while there are a number of LNG plants proposed for installation in North America, most will likely not be built.
One of the most important factors in installing an LNG facility is a "not in my backyard" (Nimby) attitude very apparent in areas like Florida and California. O'Sullivan said an LNG plant in Baja California, Mexico, presents little Nimby risk or technology risk while a plant proposed for the Bahamas presents little Nimby risk but has technology risk associated with the Gulfstream in the Gulf of Mexico. The Baja California site, however, would be limited by infrastructure, he noted. Onshore plants along the GoM and the east and west coasts present the most Nimby risk, he said. Offshore plants along the the GoM and the east and west coasts present less risk because the facilities wouldn't be visible from shore. Offshore technology risk is less than onshore Nimby risk, he added.
"Offshore terminals will come," O'Sullivan said.
Also during the forum, Snamprogetti Senior Vice President of Operations Enzo Caetani examined the role of risk as a factor in the continuing trend of consolidation among contractors. Many contractors have ceased bidding on fixed price contracts, he said, because of the imbalance between risk and reward. The oil and gas industry has two potential paths, he said. The first is centered on contracts with adequate levels of margins, in which contractors maintain management risk capability, and with innovative strategies and continuous improvements made possible by good profit levels, he said. In the second scenario, he said, margins would not be proportionate to risk assumed in the fixed price contracts, potentially leading contractors to losses and an economic slump. This would leave the contractor less able to bid on a lump-sum turnkey (LSTK) project but facing unavoidable cost overruns and project delays when those contracts are won, Caetani said.
"We must be honest with both ourselves and our clients and not give in and accept every kind of risk if we do not feel that we are able to tolerate it," he said.