Shell’s FLNG Project Is Natural-Gas Game Changer

Fracking has been a game changer not just in terms of cost, but also in regards to the availability of natural gas in North America.

Now western Australia is seeing its own game changer—if not to deliver the ultra-low prices of US shale gas, then at least to ensure long term supply at a known cost, a satisfactory outcome for energy starved Asian consumers. The project, the first of what likely will be many, involves the construction of a floating liquefied natural gas plant. In some areas, the natural gas field is sufficiently large, but it’s too far offshore to justify the massive infrastructure required to pipe the gas to land and build a liquefaction plant.

Shell thinks it has the answer to this dilemma: a floating liquefied natural gas facility (FLNG) called Prelude, to be commissioned in 2017.

Although this FLNG takes up just one quarter of the area of a land-based liquefaction plant, it will be the largest floating structure ever produced. Weighing in at 600,000 metric tons, Prelude will displace the equivalent of seven aircraft carriers, measuring over 1,600 feet long and 243 feet wide. Operating the structure will require 1,800 miles of electrical and instrumentation cables, but only 130 staff members, as much of the work will be automated. Samsung Heavy Industries in Geoje, South Korea is building this vessel. It will consume 260,000 tons of steel, none of which will be sourced from Australia.

In fact, Shell’s CEO Peter Voser told the Telegraph that one attractive element about this project was that since most of the infrastructure will be made in South Korea and Dubai, cost inflation in Australia will not be an issue. Even so, Prelude is estimated to cost Shell and its partners about $13 billion, but building it onshore would have involved 50% more infrastructure, making the project economically unsound.

According to Shell (RDSa), the Prelude FLNG facility will be deployed in Australian waters over 120 miles from the nearest point on the coast and nearly 285 miles from the nearest town. It will produce gas at sea, turn it into liquefied natural gas, and then transfer it directly to the ships, which in turn will transport the gas to customers in Asia. The planned operational life is 25 years.

But location has been a major consideration, as Prelude is to operate in category 5 cyclone territory. In order to keep it aligned with the prevailing wind direction should conditions dictate, Prelude requires a 328-foot mooring turret, along with four groups of mooring chains and suction pile anchors, each the size of a house. The 10,500-ton mooring tower is being built in five sections in Dubai, a world leader in such construction work, and it will be shipped in sections to Geoje for final assembly.

The steel alone will provide a welcome boost to local producers, mostly within South Korea, but handling the project has given Samsung Heavy Industries a global lead in what could be a growth market for shipbuilders. Shell intends to build a vessel like Prelude for the Browse project also in Australian waters and are talking about projects off Mozambique and Tanzania.

by Stuart Burns