A Prelude to a Gas Powered World

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In about three weeks, a mammoth ship will arrive at the Browse Basin, some 475km off the coast of Broome in Western Australia. It will anchor there to 16 mooring chains, floating above the Prelude and Concerto fields, processing natural gas into valuable LNG, then transferring it to gas carriers that will ship it to the rest of the world. This is Shell’s Prelude, the largest floating LNG (FLNG) facility in the world, and its completion marks a new era in the LNG world.

As it departed from the Samsung Heavy Industries shipyard in Geoje, South Korea on a month-long journey, the vital statistics of the Prelude are this – 488m long, 74m wide, using 260,000 tons of steel. It has the capacity of some 3.6 mtpa of LNG, 1.2 mtpa of condensate and 400 ktpa of LPG, rivalling some of the largest onshore plants. Commissioned in 2011 during the ascendance of LNG, repeated delays saw completion postponed since its 2012 construction start and also saw costs spiral. The initial estimate of cost was US$10.8-12.6 billion back in 2012; Shell (with partners Inpex, Kogas and CPC) in 2014 admitted the costs were rising, putting the price at US$3.5 billion per mtpa capacity – which means the upper range of costs are US$17.85 billion. With production beginning in 2018, Prelude starts life in a world very different from when it was first conceived. Back then, LNG prices were strong as demand outstripped supply. But now supply has outpaced demand, and prices have fallen in response. Spot LNG prices in Asia are now hovering at about US$5/mmbTu, compared to US$15/mmBtu back in 2012. Those aren’t good numbers; and with the wave of LNG coming out of Australia, Canada and the US growing,  those prices could fall even further…

 

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