Going global

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LNG from the ConocoPhillips gas train at QatarGas 3 will be primarily shipped to US markets using state-of-the-art tankers under construction for Nakilat.

Mike Stice, president of ConocoPhillips Qatar speaks exclusively to Oil and Gas Middle East.

In 2003, ConocoPhillips and Qatar Petroleum signed a 25-year agreement for the development of Qatargas 3, a large-scale LNG project at Ras Laffan Industrial City, Qatar.

Although veterans of the Middle East hydrocarbon sector, the new project marked a significant turning point for ConocoPhillips. For the first time a company was here to market Qatar's gas to the huge US market.

"I came to Qatar after ConocoPhillips merged in 2002 with the goal of marketing natural gas to the US. QatarGas 3 is the basis of our large footprint here," says Mike Stice, president, ConocoPhillips - Qatar.

"Today we have a 30% equity ownership in QG3 and a variety of different equity ownerships in petrochemical and related shared facilities here."

The integrated QG 3 project comprises upstream natural gas production facilities that produce approximately 1.4 BCFD (gross) of natural gas over the 25-year life of the project producing 7.8 mtpa of LNG and approximately 70,000 barrels per day of liquefied petroleum gas and condensate from Qatar's North field.

The engineering, procurement and construction (EPC) contract covers the requirements for a large-scale LNG train, and associated onshore facilities to make all products ready for market.

The LNG will be shipped from Qatar in a fleet of large, state-of-the-art LNG carriers and is destined for sale primarily, but not exclusively, in the United States. The first LNG cargos are expected to be delivered to the US from QatarGas 3 in 2009.

ConocoPhillips were early movers in seeing the potential to sell gas to the American market. As mature fields in the US have depleted, the demand for imported LNG has steadily risen.

"Typically North America drilled very high volumes of sweet gas with barely any contaminants at all, but then as those volumes declined, more difficult reserves became the norm. It's now got to the point that new gas deposits in North America are found in tight sands requiring cmpanies to be very clever with drilling and stimulation techniques to bring the gas to the surface," he says.

With sour and tight gas field development comes much greater cost, so the abundance of Qatar's sweet gas, combined with increasingly efficient shipping technology, made the collaboration for the US market appealing.

"We were the first to sell the US market to the Qatari's. The companies that moved before us were typically focussed on selling gas to Asian markets, mainly to countries that did not have their own domestic energy supply, such as Japan, Korea, and Taiwan."

The whole Qatar export infrastructure up to that point was designed to send LNG East, or to Europe. North America was being served by its own domestic production. "It was a quite a paradigm shift to consider shipping west at that time," muses Stice.

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