) plans to develop a huge floating liquefied natural gas project
(FLNG) to process gas from its Scarborough field, off the coast
of Western Australia. The project is in response to the rising
cost of setting up LNG plants onshore Australia.
ExxonMobil jointly holds the project with mining giant
BHP Billiton Ltd.
). Per the filing, both the partners will decide on whether to
proceed with the initial design and engineering work of the
floating LNG venture in 2014 or 2015, while the project is
expected to be commissioned in 2020 or 2021. The field is
estimated to produce 6-7 million tons of LNG per year.
Other energy companies like
Royal Dutch Shell plc
) and Malaysia's Petroliam Nasional Bhd have already started
working on these projects. Royal Dutch is building a Prelude
floating LNG vessel in Australia estimated to cost around $12
billion, with a capacity to produce approximately 3.6 million
tons of LNG annually.
) along with its partners has plans to invest about $52 billion
for the construction of the Gorgon onshore LNG plant that has a
capability of generating 15 million tons of LNG annually.
Floating LNG plants score over onshore plants in many
respects. FLNG are smaller in size, cost less for construction
and also have a lower environmental impact. Further, issues of
native title and land clearing approvals are not needed. Onshore
plants entail huge expenditures for infrastructure, which include
extensive pipelines, jetties and roads that are not significant
in FLNG projects.
In this scenario, ExxonMobil's entry into this segment will be
immensely beneficial over the long term.
Exxon Mobil holds a Zacks Rank #3, which is equivalent to a
short-term Hold rating.
BHP BILLITN LTD (BHP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.