Executive Viewpoint: Excelerate Energy sees huge new-market potential for FSRUs

Excelerate Energy is a pioneer and market leader in floating LNG regasification solutions. The company provides integrated services with the objective of delivering rapid-to-market and reliable LNG solutions to customers. Excelerate offers a full range of floating regasification services, from FSRU to infrastructure development to LNG supply.

Gas Processing & LNG recently talked with Cal Bancroft, Executive Vice President and Chief Operating Officer of Excelerate Energy, about the company’s current projects, including for its proprietary Floating Liquefaction Storage and Offloading (FLSO) vessel technology.

GP. Can you share some background on Excelerate Energy and its major projects? Also, how do you see the volatility in the oil market and the COVID-19 pandemic impacting present and future gas demand?

CB. Excelerate Energy has been in operation for over 15 yr and has led the industry in floating regasification terminal solutions. We started the floating regas industry with the delivery of the first floating storage regasification unit (FSRU), the Excelsior, in 2005, as well as the commissioning of the first offshore LNG receiving terminal, Gulf Gateway Deepwater Port in the Gulf of Mexico, that same year.

Since that time, we have seen the technology widely adopted across the globe as a cost-effective and efficient solution for importing LNG. We have opened new markets for LNG in Argentina, Israel, Pakistan, the UAE and Kuwait. Our FSRUs have regasified at 15 different terminals—either a proprietary terminal like our import terminals in Boston and Bangladesh, or third-party terminals. To date, Excelerate has conducted 1,863 transfers of LNG, and our FSRUs have processed more than 217.6 MMm³ of LNG.

One of our most recent projects is the Moheshkhali Floating LNG Terminal (MLNG), located in the Bay of Bengal. It is Bangladesh’s first LNG import terminal, and the country has seen immediate benefits since we commissioned it in 2018. The terminal provides a 20% uplift in the country’s total gas supply. It has revived several power plants, fertilizer factories, and industrial facilities that were previously dormant due to lack of supply. Unlike other floating terminals, where responsibilities are divided among several companies, MLNG is the world’s first fully integrated, turnkey, floating LNG terminal whereby all services are provided under a single contract by a single provider—Excelerate Energy. This approach streamlines operations for our customers, especially those new to the LNG market. It is apparent that FSRUs work well in parallel with existing supply sources and are re-deployable over their lifetimes.

Regarding the market, over the past decade, the industry has seen a paradigm shift in the marketplace for global LNG trade, which has brought increased liquidity, destination flexibility for the delivery of cargoes, diversified price formulas and a burgeoning spot market. The shale gas revolution in the US and the buildout of LNG production facilities, especially in the U.S. and Australia, also have contributed to this shift.

In its current state, the LNG market has entered into more of a buyer’s market, with spot prices in 2020 hovering around $2/MMBtu, driven in part by an enormous temporary reduction in energy demand due to COVID-19. This has been further exacerbated by the downturn in oil prices and slower growth in the investment of LNG infrastructure in new and emerging markets, which is necessary to meet the demand for natural gas in these markets and to keep pace with global supply growth. These conditions have allowed buyers in the market to dictate historically competitive prices and flexible terms within their sales-and-purchase agreements (SPAs).

Looking ahead, as the global economy slowly reopens and continues its road to recovery, a majority of industry forecasts estimate that the LNG marketplace will be oversupplied across most of the 2020s and will require substantial investment in LNG infrastructure to access new markets. We expect future investments to be mainly based on new FSRU terminals, since FSRUs avoid the massive up-front investment that land-based terminals require.

GP. How was Excelerate’s FSRU technology developed, and what are its major benefits?

CB. Excelerate Energy formed in 2003 with the vision of realizing a new concept—floating LNG regasification—to open new markets for LNG in the U.S. The basis for this new category of vessel, known today as FSRU, was to utilize proven technology and incorporate regasification equipment into the design of a newbuild LNG vessel. Floating regas provided a new way to import LNG without having to build costly and time-intensive, land-based terminals.

Since its inception, not only has the floating regasification concept proven to be highly effective in providing energy and improving lives, but it also opened the market to a new and innovative way to access natural gas around the world. FSRUs act, in all aspects, similar to a land-based terminal. In addition to transporting LNG, FSRUs have the onboard capability to vaporize LNG and deliver natural gas through specially designed offshore and nearshore receiving facilities.

With a significantly lower capital cost than a traditional, land-based terminal, and a shorter typical project timeline, the efficiency of floating regasification solutions has allowed otherwise unserved markets the possibility to import much-needed natural gas.

GP. Where do you see opportunities for future FSRU application?

CB. The opportunities for FSRUs in the global market are as varied as the markets we currently serve and those we hope to open. FSRUs are an economical and efficient way to access natural gas in those markets in need of supply. With the growth of LNG supply in the market, the price is very attractive for countries utilizing coal and liquids for power to enter the market and transition to cleaner fuels.

Some markets find having the security of supply vital, especially to meet seasonal peaks in demand. FSRUs are best positioned to open these new markets and are an essential part of the global market. Also, the knowledge gained from our project partners yields unique insights, leading to opportunities upstream and downstream, as well as for more FSRUs.

GP. Excelerate provides various types of gas import solutions to many countries around the world. What are some of the lessons learned from these projects, and what takeaways can Excelerate apply to future developments?

CB. Every project comes with a unique set of challenges. Floating terminals are very complex by nature, and they face construction challenges along the way. Because of this, we have been able to build our unique engineering skill set over the years, having constructed floating terminals in different environments around the world. We embrace the challenges. It is not easy to introduce something completely new, like LNG or an FSRU, to the system of a new market.

Besides the technical aspects of a project, we have found the best approach when entering into a new market is to be a global company, but to act locally. Our priority is to have people on the ground and immerse ourselves as a company in the different communities we serve. A collaborative approach helps these projects become realities. Our goal is to be a unique solution provider with a clear and growing list of capabilities to differentiate ourselves from our competition while fully supporting our client base.

GP. Which countries or regions hold the most potential in terms of business expansion for Excelerate?

CB. We see various opportunities around the world, especially with the amount of LNG that will be entering the market. We feel there are three areas of opportunity: countries that have significant energy deficits and are looking to increase their natural gas capacity; countries looking to switch to cleaner fuels for environmental reasons; and countries looking for energy security to meet spikes in seasonal demand.

We continually work with our customers to ensure our terminals are meeting the changing demands of any particular market. This could be in an upgrade to send-out capacity or a modification to the FSRU for better fuel efficiency. We think innovation in the market will be less about the technology and more about how projects are put together. Like our MLNG terminal, new customers to LNG are looking for a more bundled approach to projects, where a single provider can manage the LNG terminal, the gas supply and even the power supply.

GP. What are the most essential elements of safety and security on floating LNG regasification projects, and how does Excelerate work to ensure the safety of its fleet?

CB. Excelerate Energy is focused on the strategic objectives of no harm to people, continuous environmental improvement and compliance, strict adherence to internal and external mitigation requirements, and the safety and security of our people and assets.

There are many key elements to our health, safety, security and environment (HSSE) targets, such as personal responsibility—i.e., we understand and accept what should be done, and we know what is expected of us; individual consequences—we understand and are motivated to enhance our controls relative to risk management; and proactive intervention—we empower our teams to work safely, simply because we are motivated to do the right things naturally, not because we are told to do so. In essence, we want to make interventions and actively participate in improvement activities.

Our remit as an enterprise pertains to leadership—clarity of risk mitigation and security vision, strategies, and priorities; commitment—training, resources and management attention/support; accountability—clarity on who is accountable for what actions; and involvement—all parties participate in the process of improvement and risk mitigation initiatives. We engage our team members globally, including our FSRU vessel complement, and embed safety and security training in all of our activities. GP

 

CALVIN (CAL) BANCROFT is the Executive VicePresident and Chief Operating Officer for Excelerate Energy. With more than 40 yr of experience in the shipping industry, his expertise in maritime security, chartering, supply chain management and operational logistics has been recognized by both the industry and through four public commendations from the U.S. Department of Homeland Security. Most recently, Mr. Bancroft led the reinvention of Phillips 66 organizational culture as Global Marine Operations Manager, creating an environment of trust and collaboration while improving the company’s recruitment and retention, global competitiveness and profitability.Prior to his tenure at Phillips 66, Mr. Bancroft was Commercial Logistics Manager for the Americas at Shell Chemical LP, directing the contracting and operational logistic strategies for eight chemical business units while improving chemical cost trade lane logistics and efficiency. He was also Vice President of Fleet Operations and Facility Security Officer with Ocean Shipholdings Inc., managing a commercial fleet of about 20 vessels.Mr. Bancroft holds a BS degree in nautical science from Maine Maritime Academy in Castine, Maine and an MBA degree in international business and marketing management from the University of St. Thomas in Houston, Texas. He also served in the U.S. Naval Reserve.