On December 26, Royal Dutch Shell began output at its ‘Prelude Floating Liquefied Natural Gas (FLNG)’ facility in Australia, the world’s largest floating production structure and the last of a wave of eight LNG projects built in the country over the last decade.
Leading LNG exporter
The project started up later and cost more than originally estimated, it is expected to further cement Australia’s lead as the world’s biggest LNG exporter after the country took the crown in November. Shell owns 67.5 percent of the project, while Japan’s Inpex Corp, Taiwan’s CPC Corp, and Korea Gas Corp hold the rest of the shares.
In a statement, Shell said: “Wells have now been opened at the Prelude facility, located 475 kilometers north-northeast of Broome in Western Australia. This means Prelude has now entered start-up and ramp-up, the initial phase of production where gas and condensate – which is an ultra-light form of crude oil – is produced and moved through the facility”.
Australia overtook Qatar as the world’s largest exporter of LNG for the first time in November, after the start-up of a number of export projects over the past three years, most recently the Ichthys facility.
Export to begin in 2019
Prelude is expected to have an annual LNG production capacity of 3.6 million tonnes, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of liquefied petroleum gas (LPG). Analysts estimate exports to start by early next year, with condensates likely to start first.
Saul Kavonic, an energy analyst at Credit Suisse in Sydney said, “First LNG cargo is still several weeks assuming all proceeds as planned, but the timing of first cargo and pace of ramp-up is still subject to technical risk. Given Prelude’s novelty, geographic conditions and challenges, it may be subject to greater risk to timeline from wellhead production to first cargo than an average LNG project. We expect Shell to seek to get it done right, rather than rush things”.
Russian to amp its game
Kittithat Promthaveepong, a Senior Analyst at FGE, “The start-up of Prelude, following the ramp-up in production at Ichthys and Russia’s Yamal LNG, is expected to put pressure on the Asian market next year”.
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