Shell first to launch FLNG production
The world's first floating liquefied natural gas (FLNG) production plant was approved by Shell today
The supermajor’s Prelude FLNG project will tap gasfields offshore Australia and liquefy output onboard a huge floating-production facility before shipping it to customers.
“Our innovative FLNG technology will allow us to develop offshore gasfields that otherwise would be too costly to monetise,” said Shell upstream executive director Malcolm Brinded. “This project is a true breakthrough for the LNG industry,” he added.
Prelude FLNG, moored 200 km off the northwest coast of Western Australia, will tap 3 trillion cubic feet of resources at the Prelude and Concerto gasfields. Prelude is expected to produce 3.6 million tonnes a year (t/y) of LNG, 1.3 million t/y of condensate and 400,000 t/y of liquefied petroleum gas. Commercial operations are set to start in 2017.
Shell did not reveal the cost of the Prelude project, but is investing $30 billion in Australian upstream projects up to 2015, which will include the company’s 25% stake in the 15 million t/y Gorgon LNG project, due on stream in 2014, as well as other developments.
“Shell's final-investment decision on Prelude could be a game changer for FLNG production. The challenge is getting the first facility in operation at an economic price,” said David Ledesma, fellow at the Oxford Institute for Energy Studies.
Shell’s FLNG technology will allow it to exploit stranded gasfield worldwide. “Beyond [Prelude], our ambition is to develop more FLNG projects globally. Our design can accommodate a range of gasfields and our strategic partnership with Technip and Samsung should enable us to apply it progressively faster for future projects,” Brinded said.
But others think the FLNG market will remain small with onshore terminals still the likely choice of technology for new projects where possible.
"I believe FLNG will play a relatively niche role in the LNG business as a whole. Onshore conventional technology will continue to be the preferred option for most LNG developments," Andrew Pearson, head of LNG research at Wood Mackenzie, said.
Prelude FLNG will be the largest floating facility in the world at nearly 0.5 km in length and 74 metres wide. The volume of steel used in its construction will be five times the amount required to build Sydney Harbour Bridge.
Prelude is one of a number of developing Australian LNG projects looking to export gas to energy-hungry Asian economies. Other projects include the Chevron-led Gorgon, BG Group’s 8.5 million t/y Queensland Curtis LNG and the Santos-led 7.85 million t/y Gladstone LNG project.
Australia’s LNG export capacity could more than double to 50 million t/y by 2014 if all the projects start on time. By 2018, the country could be challenging Qatar (77 million t/y) as the world’s largest LNG producer, according to consultancy EnergyQuest. Australia exported over 18 million tonnes of LNG in 2010, according to Cedigaz, up by 5% over 2009.