$12bn Prelude floating plant has Shell fired for LNG , Shell in Australia
Release Date: 2011-05-20
ROYAL Dutch Shell has approved its world-first Prelude floating LNG project off Western Australia at an estimated capital cost of up to $US12.6 billion ($11.8bn), in a move that will allow it to access major gas deposits stranded hundreds of kilometres from the coast.The Anglo-Dutch giant said in Perth yesterday that it had given final invesment approval for the revolutionary project, which will mark the first time a floating LNG vessel has been deployed to produce gas and liquefy it on board by cooling.
More than $200bn worth of LNG projects are on the drawing board in Australia, which is expected to become the world's second-biggest global exporter of the cleaner burning fuel by 2020.
Approval for the Prelude project comes as the LNG sector faces an investment boom.
US energy giant Chevron, Japan's Inpex and Perth-based Woodside Petroleum are all close to signing off on multi-billion-dollar developments in Australia.
The investments come in response to strong demand for LNG, including that from China and Japan.
Shell upstream international executive director Malcolm Brinded described the Prelude project in the Browse Basin as as a "game changer" and a colossal undertaking.
The floating facility will be 488m long -- longer than four soccer fields laid end to end.
It will be the largest floating structure ever built and will be permanently moored about 200km from the coast during its 25 years of production.
The vessel, to be built by South Korea's Samsung Heavy Industries, will be six times heavier than the world's biggest aircraft carrier and designed to withstand severe category 5 cyclones.
Prelude is expected to produce 3.6 million tonnes per annum of LNG, as well as volumes of condensate and liquefied petroleum gas.
It is scheduled to begin production in 2016.
Mr Brinded declined to provide a precise capital cost for the project. However, he said it was likely to cost between $US3bn and $US3.5bn per million tonnes of production, which equates to an investment of between $US10.8bn and $US12.6bn.
Mr Brinded said he believed several more floating LNG projects, including the stalled Woodside-led Sunrise project in the Timor Sea, would be approved before Prelude became operational in 2016.
Shell is a joint venture partner in Sunrise, which is mired in a dispute with the East Timorese government.
East Timor insists that an LNG plant for Sunrise be built on its shores.
"We need the support of the Australian government and the Timor-Leste government, and we hope that will be forthcoming,"
Mr Brinded said. Shell this week signed an agreement to supply Taiwan's CPC Corp with two million tonnes of LNG per year for 20 years. It also has an agreement with Osaka Gas for 0.8 mtpa from the Prelude project.
Federal Resources Minister Martin Ferguson said Prelude was expected to add more than $45bn to Australia's economy and improve the nation's balance of trade by at least $18bn.
"It opens the doors to countless new opportunities both here in Australia and around the world to use new technology that makes it more economical to develop remote deposits," Mr Ferguson said.
"Floating LNG technology can unlock petroleum resources that are either too far from existing infrastructure or too small to develop via a conventional LNG project and has the added benefit of a smaller environmental footprint."
Mr Brinded said government studies had shown there were 140 trillion cubic feet of stranded gas in Australian waters that were yet to be developed.
Shell plans to spend between $30bn and $50bn on Australian LNG projects over the next decade. These include the Chevron-led Wheatstone and Gorgon projects and the Woodside-led Browse project, all in WA, and the Queensland coal-seam gas assets it acquired last year.
Shell also said it was "satisfied" with a 24 per cent stake in Woodside Petroleum after selling 10 per cent last year.
"We don't have any plans at this time for the remaining holding," Shell Australia chairwoman Ann Pickard said yesterday.
"I'm pretty satisfied with Woodside as it is today and our interest as it is today.
"Woodside has grown in the last 10 to 15 years from being a company very, very closely linked to and supported by Shell to being a strong, independent Australian company."
| Type: | NORMAL |
| Company: | Shell in Australia |
| Country: | Australia |
| Url: | http://www.theaustralian.com.au/business/bn-prelude-floating-plant-has-shell-fired-for-lng/story-e6frg8zx-1226059923612 |