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Royal Dutch Shell Prelude to disaster?

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“Hundreds of man-years will go into all this certification alone for Prelude. Only if there is a good level of trust and no fear for retaliation will all this work. But that trust needs to be earned over several years with a stable project group. That is not the case here, everyone is trying to make money on this flagship and then run away as fast as they can.”

By John Donovan

On 28 December I broke the news that a whistleblower had supplied me with photograph evidence to support their concerns over the safety of the construction of Shell’s Prelude FLNG flagship vessel.

Information from Shell website about Prelude FLNG:

In July 2009, Shell awarded a consortium of Technip and Samsung Heavy Industries the contract for the design, construction and installation of multiple FLNG facilities over a period of up to 15 years, based upon Shell’s proprietary design.

In May 2011, the Board of Royal Dutch Shell plc made the decision to proceed with the Prelude FLNG Project and start construction of its pioneering FLNG facility, to be the largest floating structure ever built.

The FLNG facility itself will be 488m long and 74m wide, and when fully loaded will weigh around 600,000 tonnes – roughly six times as much as the largest aircraft carrier.  Some 260,000 tonnes of that weight will consist of steel – around five times more than was used to build the Sydney Harbour Bridge.

Extracts End

According to a newspaper article published last October, Shell won’t disclose the costs of Prelude, but analysts put it at close to $13bn (£8bn) and as Shell has indicated, Prelude is expected to be the first of several Shell FLNG plants and is therefore of major importance to the future of Royal Dutch Shell.

The Prelude source alleges that packages are being installed on the vessel by totally unqualified personnel and accuses management of a failure to understand standards and regulations and claims the construction work would never pass UK standards.

The source has been intimately involved in the project and is genuinely concerned that warnings issued to Shell management (and other parties) have been ignored and financial considerations are taking priority over safety issues.

Since publishing the initial article, I have circulated the purported photographic evidence and a related sample Prelude Inspection Report to oil and gas industry experts, including a well-known expert on offshore safety. I cannot vouch for the authenticity of all of the documentary information, but based on the overall information supplied, and some online research, I believe it is almost certainly genuine. A conclusive determination is not feasible because if I were to put the current evidence directly to Shell for verification, it would risk exposing the identity of the source.

The expert assessments I have received, based on the claimed photographic evidence of installation work, describes the workmanship as “very poor” with the wiring installation described as “a bit of a dog’s breakfast”. Mild criticism based on limited, unsubstantiated evidence, obviously cannot be taken as confirmation of the serious allegations made by the source. They might however make some Lloyd’s underwriters slightly uneasy.

To make a proper assessment on such matters, the experts very kindly advising me would need detailed information such as certification surveys Lloyd’s et al, internal audits or reviews that may have been completed to date. The source has indicated that further evidence will be forthcoming.

One Shell insider pointed out to me:

“You have no idea how complex all this is. Every single weld on pipes needs to be verified, i.e. inspected, x-rayed, photo stored and all inspected on inclusions and defects. Zillions of tests on the electrical systems and ICT stuff. So when you push a button, it should start a process you have in mind…. Hundreds of man-years will go into all this certification alone for Prelude. Only if there is a good level of trust and no fear for retaliation will all this work. But that trust needs to be earned over several years with a stable project group. That is not the case here, everyone is trying to make money on this flagship and then run away as fast as they can.”

His advise to the Prelude source:

“Has he vented his concerns to his own boss? He should send an email to his boss with his concerns. Then if still not happy send the same one to a senior Shell inspector. Maybe first have a word in confidence, but should bear in mind that his career will be at risk from this moment onwards….  His email to the Shell rep (often this may also be a contractor…) should start with ‘as we discussed earlier, etc etc.  Finally he should step into the office of the most senior real Shell man and vent his concerns. Build a dossier to defend himself. I presume there are many certifying companies doing inspections etc and signing off work. Shell simply does not have the numbers but should have a few senior inspectors around who supervise the ‘real’ inspectors.”

Since the well-being of Prelude employees and contractors is at stake, if Shell does not deal properly with safety issues properly brought to their attention, as is alleged by our source, then we will happily consider any such information entrusted to us and protect the identity of the source, as we have done on this occasion (and previously with other Shell project whistleblowers stretching back over the last decade e.g. Sakhalin2).

Shell’s failure to heed warnings in respect of its North Sea Platforms resulted in the Brent Bravo explosion and the avoidable deaths of two contractors. Shell received a record breaking fine for what amounted to manslaughter for adopting a Touch F*** All” safety culture, putting production and costs before safety. That sad but true fact should be borne in mind to avoid a disaster befalling the Prelude FLNG project.

We should also remember Shell’s recent trouble-plagued record in its shambolic Arctic drilling campaign.

“When the U.S. Department of the Interior reviewed Shell’s 2012 drilling operations, following a series of problems culminating in the grounding of the Kulluk, the company’s floating drilling platform, the agency particularly criticized Shell’s oversight of its contractors, saying that the company’s management systems were insufficiently robust to manage and minimize risk in contracted operations” – extract from Petroleum News article: “Arctic Drilling: Shell explains its contractor management“.

Being aware of more than I have disclosed thus far, I will simply say that the same lack of supervision may also be relevant to Prelude FLNG.

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