US-listed New Fortress Energy has bought two Seadrill drillships to convert into floating LNG (FLNG) production units under its Fast LNG concept.
Speaking on a fourth-quarter results call company chairman and chief executive Wes Edens revealed that the company is buying “two Sevan deepwater drillships” which he said would be great for deep and shallow water applications due to their big deck space and ability to handle heavy loads.
Edens said New Fortress acquired the vessels at “bargain rates”, paying around $22m each for the vessels which cost over $600m to build new.
Sevan Drilling was bought by John Fredriksen Seadrill in 2011.
New Fortress is adding liquefaction units to a jack-up rig which it plans to deploy as its first Fast LNG FLNG unit from the start of 2023 in a deal it has signed with Eni to monetise gas reserves off the Congo in West Africa.
The company plans to take a final investment decision (FID) on its second 1.4 million tonnes per annum FLNG project which would use one of the drillships. This project is scheduled to be in operation by the third quarter of 2023.
The CEO described Fast LNG as “very much in the gunsights” adding: “I believe FLNG in some form or another will become very much the standard for offshore production around the world,” he said.
Edens and his colleagues tore through a wide-ranging results presentation at break-neck speed.
They detailed how the company has morphed into a larger global entity with midstream, downstream and shortly upstream assets.
Edens said New Fortress has more than doubled its LNG portfolio in the last year and will do the same again in 2022 to give it an LNG portfolio of nearly 3 million tonnes per annum this year.
Terminals: 11 terminals in operation or under development.
Ships: 20 ships, comprising 9 FSRUs, 5 FSUs and 6 LNG carriers
LNG: 2.9 mtpa, 2.2 mtpa from three supply contracts, 0.7 mtpa from first Fast LNG unit
The company expects to start up its Barcarena and Santa Caterina LNG terminals in Brazil in the second quarter of 2022 and sees the potential to take FID on its planned Shannon LNG in Ireland where it is in the final stages of negotiations for both the terminal and power plant.
Swivelling on to its emerging hydrogen business Ken Nicholson, who is chief executive of the New Fortress Energy and US-based Fortress Transportation and Infrastructure tie-up Zero Parks, said the venture expects to take FID and break ground in the next 60-90 days on its first US-based green hydrogen production plant.
On the energy transition, Wes Edens said there are two conflicting themes – energy poverty, with people needing electricity, and the need to decarbonise.
“Extremists on either side of the equation really do miss the point of what we are trying to accomplish,” he said.
The chief said that 100% renewable power today is not dispatchable. While New Fortress believes gas is the transition fuel but he added: “We believe the world is on verge of being structurally short of gas,” listing the drivers for this and explaining it is driving his company’s view of its own portfolio.
Nicholson said the site for the 100MW plant, which is scaleable to 500MW, is on the US Gulf coast and New Fortress is talking to customers in industry, power and transportation about sales from this plant.
He said the company expects to identify more sites in the next six to nine months and aims to develop a network of hubs to become the largest green hydrogen production business in the US.
New Fortress reported record annual and quarterly net income figures.
The company logged a full-year net income for 2021 of $92.7m, a turnaround from a loss of $264m in the previous year.
Fourth-quarter net income came in at $152m.
Revenue for 2021 soared to $1.3bn up from $451.7m in 2020.
