In a wide-ranging report on FLNG issued last week, KPMG Global Energy Institute said that if the FLNG front runners - Shell especially - could meet a number of key technical, commercial and financial challenges, then the firm predicts FLNG will emerge as "a key pillar of a 2020s LNG business that looks quite different from that of today".
The signs certainly look good. The $US60 billion ($A73 billion) Douglas Westwood estimates will be spent on FLNG projects between 2014 and 2022 may just be the start, with 22 FLNG vessels potentially in place by 2022, with another 22 "possibles".
Global majors including Woodside, Petronas, ExxonMobil and Inpex have all joined Shell in "taking another look" at FLNG, with numerous offshore projects in Southeast Asia, Australasia, Africa, the Eastern Mediterranean and Latin America potentially benefiting from the evolving technology.
Developers in western Canada and Papua New Guinea are even considering FLNG for onshore fields, with novel gas resources like Brazilian pre-salt associated gas and North American shale gas opening up new possibilities to use floating systems for export.
Perhaps the biggest factor, given the current oil slide which EnergyQuest said in its latest industry quarterly would hit Australia's LNG projects eventually, is FLNG's capacity to help industry avoid the "gold rush economics" which was blamed for escalating costs in Australian LNG and Canadian oil sands and is also a worry for Western Canadian LNG developers.
Mary Hemmingsen, partner and national sector leader LNG, power and utilities at KPMG in Canada, said FLNG presented a configuration to mitigate labour and construction cost escalation as faced in Australia and Canada by enabling construction to occur in lower cost areas with more labour depth such as Korean shipyards.
Countries new to the LNG business like Mozambique and Tanzania will find it difficult to supply sufficient skilled personnel, while FLNG projects can widen the circle of contractors beyond the seven world-scale LNG EPC companies.
"Shipyard construction also spreads the risk of currency appreciation, with 50% of project costs for onshore projects typically in local currency," KPMG said.
"Contrastingly, in areas with abundant skilled labour, such as the US Gulf Coast, this will be less of a driver for companies to choose floating options."
Equally intriguing is FLNG's potential impact on the geopolitical front. The cliché "controlling energy is to control power" has even been used in James Bond film scripts, but for places like west Africa and the eastern Mediterranean the threat is a clear and present danger.
With onshore fields and pipelines frequently coming under attack in parts of west Africa and the Middle East in recent years, placing the facility offshore makes it less accessible to would-be attackers or saboteurs and can be supplemented with other defensive measures, including remote monitoring and barriers, to make it difficult to scale the vessel.
"That said, piracy is a known risk and still requires safety precautions, including international cooperation in the case of the Eastern Mediterranean," KPMG conceded.
Depending on the success of pioneers like Shell, FLNG will either become a "niche technology" applied by only a few companies with land-based configurations as the default, or it will emerge as a standard approach that eases the industry's cost inflation issues.
KPMG said the first scenario would eventuate if the first FLNG plants encounter cost or operational difficulties or if land-based costs fall as the current construction boom ebbs - making small-scale gas-to-liquids or compressed natural gas more viable competitors for smaller offshore gas fields.
If the likes of Prelude succeed the potential seems limitless.
"The concurrent development of floating regasification giving access to a range of smaller markets, and the development of new pricing methods and unconventional gas-to-LNG projects, may lead towards a faster moving, more diverse and more flexible global LNG industry," KPMG said.
Shell International E&P general manager of integrated gas programs and innovation Bruce Steenson compared FLNG's prospects to the onset of floating production, storage and offloading vessels.
"From the first oil FPSO in 1977, over a period of 1977 to 2000, 50 FPSOs were slowly installed. Between 2000 and 2010 came another 100," he said.
Projections of the global LNG output nearly doubling between 2012 and 2030 - thanks in no small part to Australia's seven projects set to go online in the next 18 months - remain threatened by frustrations dogging onshore developers.
Rising labour costs, workforce activism, community opposition, complex environmental approvals, infrastructure challenges related to the difficulty of construction in remote locations and unfavourable exchange rate movements have all contributed to cost over-runs, KPMG said.
"Construction costs, usually the largest single component, run at 30% of total project cost, but in Australian projects this has risen to 50-60%, while average capital costs of liquefaction plants rose from $US300 per tonne per year to $1200 between 2000 and 2013," the firm added.
For example, Chevron's Gorgon project in Western Australia is now estimated to cost $A54 billion, up from the original $37 billion and research firm Douglas Westwood estimates that Australia could miss out on $97 billion of LNG investments if it is unable to get costs under control.
While North America and East Africa are emerging as major potential LNG players, proponents in new supply centres like western Canada and Mozambique worry about similar cost inflation in an environment of flat or falling oil and LNG prices.
