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Shell’s battle for the heart of Ireland

Shell says it’s looking at B.C. Coast for new LNG terminal

By GORDON HAMILTON, Vancouver Sun May 27, 2011

Shell says it’s looking at B.C. Coast for new LNG terminal.
Photograph by: Leon Neal, AFP/Getty Images

Shell Canada says it is investigating the potential for a new liquid natural gas terminal to be located on the B.C. coast.

Shell “is interested in, and currently exploring LNG opportunities along the B.C. coast,” Stephen Doolan, of Shell’s media relations department said in an email to The Sun.

“We are early in the evaluation process so do not have specific details but are pursuing opportunities,” he said. “Natural gas is a key area of growth for Shell. In terms of LNG, we will continue to invest in our global leadership position as demand continues to grow.”

Doolan was responding to a queries from The Sun after references to Shell’s interest in the B.C. coast appeared in several trade journals and research reports. Those reports said Shell was in talks with Korea Gas over the feasibility of a terminal at Prince Rupert.

Doolan would not identify Shell’s partners, saying the company will only release more details “as they are confirmed.”

Petroleum Intelligence Weekly reported shortly after Japanese tsunami that, as a result of the destruction of two nuclear reactors there, “Shell and its Asian partners could scale their proposed Prince Rupert plant in British Columbia toward the top end of its mooted 8.5 million-14.0 million tonnes/year range.”

Shell has a long-standing partnership with Korea Gas, the world’s biggest buyer of liquid natural gas and it has significant holdings in both Alberta and B.C. natural gas reserves.

It also has an accelerating global interest in natural gas. Earlier this week parent Royal Dutch Shell committed to building the world’s first floating LNG facility at a cost of $30 billion US. Further, Shell is planning on spending $100 billion in capital expenditures over the next three years.

In Canada, Shell Canada paid $5.9 billion in 2008 to buy Duvernay Oil Co., a major player in B.C.’s Montney shale gas deposit near Dawson Creek.

Development of an LNG plant would cost in the range of $5 billion to $7 billion, energy analyst Bill Gwozd, of Ziff Energy said in an interview. But with natural gas selling in Asia for about $12 a unit compared to about $4 a unit in North America, that $8 differential is spawning growing interest in developing British Columbia’s potential to ship gas overseas.

“The question that the companies are now examining is: Can you get gas transported, liquefied and delivered to an Asian country for that $8 number?” Gwozd said.

The Shell proposal is one of three potential LNG terminals on B.C.’s northwest coast. Furthest advanced is the EnCana Corp., EOG Resources and Apache Corp. proposal for a $4.7 billion pipeline and LNG terminal at Kitimat to export 1.4 billion cubic feet of gas a day, making use of the existing Pacific Trails pipeline right-of-way. That project is to go before a National Energy Board hearing at Kitimat June 7. Apache executives said in that company’s quarterly conference call that gas export permits are likely to be in place by the end of the year. The first super-chilled natural gas could be shipped from there by late 2015.

The Haisla Nation at Kitimat is also preparing a joint-venture submission with LNG Partners of Houston, Texas, for a smaller LNG plant.

ghamilton@vancouversun.com

© Copyright (c) The Vancouver Sun

Shell eyes up deep-sea resources with world’s first floating natural gas rig

Gas giant eschews Arctic oil rush to moor 500-metre, 600,000-tonne construction off Australian coast

Fiona Harvey: Friday 20 May 2011 16.29 BST

Shell unveils its plans for a vast offshore gas facility

The world’s first floating natural gas platform is to be built by Royal Dutch Shell, opening up vast new areas of the deep seabed for gas exploration.

The massive platform, nearly half a kilometre long, will be the biggest floating offshore drilling structure in the world, weighing in at about 600,000 tonnes – equivalent to six aircraft carriers – and staffed by 110 people at a time. Five times more steel will be used in its construction than went into the Sydney Harbour Bridge. Shell would not say how much it is expected to cost, but the total cost of exploiting the company’s Australian off-shore oil fields, where it will be used, is likely to exceed $30bn.

It will take about five years to build, and is not expected to be fully operational before 2017.

Floating offshore gas platforms could be used to explore areas of the globe previously too remote for drilling. Companies are racing to discover offshore resources in deep water, as the world’s readily available stores of onshore and close-to-shore oil and gas have already been snapped up. Advances in technology and melting sea ice are also helping to allow oil and gas exploration in sensitive parts of the globe, such as the Arctic, where a scramble to claim the undersea resources is now under way.

Shell has no such plans yet, and will moor its new platform 200km out to sea off the coast of Australia at the Prelude gas field. The size of the Shell platform means it can only be used on large gas fields, as it would not be economically viable on smaller fields.

“Our innovative FLNG technology will allow us to develop offshore gasfields that otherwise would be too costly to develop,” said Malcolm Brinded, executive director, of Shell’s upstream international business. “Our decision to go ahead with this project is a true breakthrough for the LNG industry, giving it a significant boost to help meet the world’s growing demand for the cleanest-burning fossil fuel [and] help accelerate the development of gas resources.”

He said the company was seeking to develop more floating platform projects.

Ann Pickard, country chair of Shell in Australia, said the technology would be “a game-changer for the energy industry”.

Liquefied natural gas is a growing market as it is easier to transport. It is shrunk by about 600 times in the cooling process and can be transported before being turned back into a gas and used for power generation or heating, though it can also be used as a road fuel in specially adapted vehicles.

The floating platform, which Shell has now started to design in detail, will be built in South Korea. It will take gas from the Prelude field and liquefy it to -162C (-260F) on board, from where it will be removed by tankers and shipped to the rapidly growing LNG markets in Asia. Previously, gas had to be piped to onshore facilities to be liquefied.

The facility would be designed to withstand even the most severe cyclones, Shell said.

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Shell’s U.S. Shale Gas May Be Refined Into Diesel, Jet Fuel

Thursday, May 19, 2011

May 19 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, said a $19 billion investment in Qatar may prove that abundant natural gas coaxed from shale rocks across the U.S. could be converted into diesel and jet fuel.

Shell, which is completing the world’s largest gas-to- liquids plant in Qatar, could use the technology on a smaller scale in the U.S. if capital costs can be reduced, Marvin Odum, head of Shell in the Americas, said in an interview in London. The technology uses catalysts to turn natural gas into jet fuel, diesel and other liquids.

The development of shale fields made the U.S. the world’s largest gas producer in 2009 and caused a slump in prices. Today’s price of $4.18 is equivalent to about $24 a barrel of crude. Oil is trading at about $100 a barrel in New York.

U.S. gas producers are examining different ways to benefit from the arbitrage between oil and gas prices. In the nearer term, compressed and liquefied gas is likely to play a greater role as a transportation fuel, Odum said. Exports of liquefied natural gas by ship is possible from North America, more likely from Canada than the U.S., where there are political obstacles to exports, he said.

Shell expects to produce the equivalent of 400,000 barrels of gas in the Americas in 2015, double the figure in 2009, as it invests $40 billion in the region, The Hague-based company said last year.

Shale gas may account for 47 percent of total U.S. production in 2035, up from 16 percent in 2009, according to the Energy Information Administration.

Qatar Production

Shell’s Pearl GTL plant in Qatar will start production this year and make enough diesel to fuel 160,000 cars a day when it reaches full output. It will also make kerosene and base oils.

BG Group Plc, a U.K.-based producer that has U.S. shale fields, agrees that gas-to-liquids may have a future in North America.

We expect producers to find ways to benefit from “the huge differential between the cost of oil and the cost of gas,” Chief Executive Officer Frank Chapman said last week. That may help to reduce petroleum imports to the nation with the help of “middle distillate synthesis from gas.”

The U.S. government is examining at least nine proposals to allow exports of LNG produced from domestic gas. BG and Southern Union Co. were the latest to seek permission from the Department of Energy. Companies would like to supply the fuel to Asia or Europe where prices are higher.

“There are many other proponents talking about not only exporting gas, but finding other uses for it in the U.S.,” such as chemicals and fertilizers, Chapman said. The gap between oil and gas prices will narrow over time and it “will be good for owners of substantial gas reserves.”

–Editors: Will Kennedy, Stephen Cunningham.

Shale gas: is it as green as the oil companies say?

At the heart of the shale gas ‘sell’ is the industry’s analysis of a European Climate Foundation report – an analysis ECF rejects

Fiona Harvey, environment correspondent: Wednesday 20 April 2011 20.49 BST

A natural gas wellhead near Montrose, Pennsylvania. Photograph: Daniel Acker/Getty

“You just wouldn’t believe you could get gas out of that, would you?” said Mark Miller, chief executive of UK gas company Cuadrilla Resources, turning over a lump of hard black rock. It is dark, extremely dense and very heavy, with a smooth and almost chalky feel, and is found buried thousands of feet beneath the surface of the earth in deposits made 300m years ago.

There are no holes, nothing to betray the fact that this shale rock can be made to yield natural gas in such quantities that it could power the globe for centuries.

Shale is being hailed as the green energy of the future because new technologies can be used to fracture the dense rock and flood it with water to release bubbles of natural gas that can be burned for electricity with – according to the gas industry – only about half of the carbon dioxide emissions of coal.

“This source of gas is revolutionary,” said Malcolm Brinded, foremost expert on the technology at Royal Dutch Shell. “It will reduce dependence on imported oil, and in practice price volatility. There is a huge pace of growth.”

Oil companies are rapidly seizing the opportunity. Within two years, predicts James Smith, outgoing UK chairman of Shell, the company will go from being an oil business to a gas producer. “Estimates show that we could have enough gas to power the world for 200 years,” he said.

But proponents of renewable energy argue that the millions spent on lobbying efforts to rebrand gas as “green” are based on questionable assumptions. They say that the oil industry’s attempt to replace renewable power as the main means to combat climate change could destroy the fledgling green energy industry and thwart attempts to stop global warming.

“Any money and investment that is going to gas is money that is not going to renewables,” said Brook Riley, campaigner at Friends of the Earth. “This is a threat to renewables.”

Gordon Edge, director of policy at Renewable UK, a trade body for wind companies, said: “We must be careful not to lock ourselves into dependence on a finite imported fuel which, while it is less carbon intensive than coal, is nevertheless much more carbon intensive than any renewable.”

Oil companies see gas as a means of recasting themselves as environmentally friendly, with government backing. Newly available forms of gas appear to offer a 50% reduction in carbon emissions compared with electricity generation from coal, meaning most countries could easily meet their 2020 emissions targets – agreed at the 2009 Copenhagen climate conference – at a fraction of the expense of investing in wind, solar and renewables.

These assumptions are backed up by an economic analysis commissioned by the European Gas Advocacy Forum (EGAF) based in part on work by McKinsey, a consultancy which found that Europe could save about €900bn by 2050 if it met its emissions targets through investment in gas rather than renewables.

“This report seems to get pulled out at every meeting,” said one European commission insider. “But what they [the lobbyists] do not say is where it came from.”

This EGAF study is now under question by the very people who helped to write it. In its original form, the study found that renewable energy was the best means of meeting Europe’s energy needs while cutting greenhouse gas emissions. The sources, methodology and conclusions of this original report were made “open source” by the European Climate Foundation (ECF), the green thinktank that commissioned the research and provided much of the material.

But these open source calculations were seized on by the gas industry, which commissioned a new report altering the original conclusions to appear to show that gas would be a cheaper and more viable form of energy than renewables.

The ECF says: “We in no way endorse this [EGAF] report. Heavy dependency on gas, as this report seems to suggest, is not a viable alternative to a low-carbon generation network with low dependence on fossil fuels in terms of cost, energy security, or climate resilience

“[This is because] it will make Europe dependent on one potentially cost-volatile solution, and the successful commercialisation of carbon capture and storage at an unrealistically large scale. It also reduces Europe’s energy security [because Europe has few shale gas reserves to exploit, unlike the US and Asia]. These are high-risk strategies indeed.”

Privately, green campaigners and officials in Brussels are furious at EGAF’s actions. “It is outrageous,” said one insider, who cannot be named. “The way in which this has been distorted by the gas industry is unbelievable.”

What is more, the industry’s core assumption that shale gas offers a 50% reduction on burning coal has also been sharply challenged by a new academic study.

Gas, in its pure form, burns in power stations with about half the carbon dioxide produced by burning coal. But if all of the associated emissions of shale gas are taken into account, this benefit disappears, according to a newly published study from Cornell University.

The study, published in the Climatic Change Letters journal, showed that about 4-8% of the methane from shale gas production escaped to the atmosphere via leaks and venting over the lifetime of a well – much more than from conventional gas drilling. As methane is more than 20 times as powerful a greenhouse gas as carbon dioxide, shale gas is likely to prove more harmful in climate change terms than even coal, which is usually regarded as the dirtiest fossil fuel. The Cornell study concluded that shale gas used to generate electricity had about the same carbon footprint as coal, or even a slightly higher one, and when used as heating or transport fuel would be no cleaner than diesel.

The authors concluded: “The large GHG footprint of shale gas undercuts the logic of its use as a bridging fuel over coming decades, if the goal is to reduce global warming. We do not intend that our study be used to justify the continued use of either oil or coal, but rather to demonstrate that substituting shale gas for these other fossil fuels may not have the desired effect of mitigating climate warming.”

Nor does the fuel appear green when the side effects are taken into account, some of which are potentially lethal. From the US, where the fracturing – fracking – of shale rock has been pioneered, come myriad reports of disastrous gas leaks, land contaminated by the chemicals used in extraction, and drinking water rendered unsafe by pollution from the drilling. The film Gasland featured families whose homes were uninhabitable and who were suffering health problems.

Gas advocates, such as Miller of Cuadrilla, argue that the film, and many other similar reports from the US, seized upon examples from a small minority of companies that have cut corners and pursued poor practices. “There are always a few bad apples in any industry,” he said. “But it is possible to do this in a clean, responsible way that does not lead to these kind of problems.” His company, he said, was spending more than the average in order to ensure its sites did not lead to contamination or gas leaks.

Gas companies also seek to reassure governments and green campaigners that their fuel does not compete with renewables, and can even help countries to include more renewables in the energy mix because it provides flexible generation that can be turned off or on quickly to cope with the intermittency of renewable energy. Green campaigners are less optimistic. They believe that pursuing gas – which is artificially cheap outside Europe because its associated emissions are not properly taken into account – will crowd out investment in renewables, until it is too late and the world is committed to a gas-powered future.

The consequences for genuinely green forms of power, such as wind and solar, could be dire. Investment in gas is posited as an alternative to green fuels. In the US, climate change has been chiefly framed as a matter of energy security. Emissions cuts have been promoted as a way of reducing foreign oil dependence so a new domestic fuel source is very attractive.

With shale gas in plentiful supply in the US, the needs of energy security can now be met without the sharp reductions in emissions needed to avoid dangerous levels of global warming. Investment in wind and solar in the US have already been hit hard by a combination of competition from shale gas, recession and weaker government assistance. The number of wind turbines being erected has “fallen off a cliff”, according to General Electric, one of the biggest turbine manufacturers.

“In the US, it’s as if they do not have to do anything about climate change because they say ‘we have shale gas’,” said Connie Hedegaard, the EU climate chief, of her recent visit to the US. “But you have to have climate change as part of the equation … and avoid the lock-in to fossil fuels.”

That is another key point: The development of a new generation of gas-fired power stations threatens to perpetuate a long-term future of fossil fuel energy generation. Switching from coal-fired power stations to gas produces sizeable short-term reductions in greenhouse gas emissions, as the UK proved through its “dash for gas” in the 1980s and 1990s. But after the initial gains – and unlike renewable energy sources – gas-fired power stations carry on producing carbon emissions for decades. The life of a plant can stretchfrom 25 to 40 years, with the right maintenance

If a new fleet of gas-fired power stations built in the next 10 years are still producing emissions in 2050, it will be impossible for the world to halve emissions by 2050, as scientists say we must.

For this reason, EGAF’s analysis assumes all gas-fired power stations will use carbon capture and storage (CCS) technology from 2030, reducing their emissions to nearly zero.

But the technology has never been used at a commercial scale. Pilot projects cost about £2bn each, running costs are unknown, and there are likely to be severe limitations to where carbon dioxide can safely be stored underground. Using the technology also reduces the amount of energy a power plant can produce.

EGAF assumes that CCS will become “economically viable” in the mid-2020s, but if these complex estimates are even slightly inaccurate, and the technology is more expensive than forecast, by then it would be too late for the renewable industry.

Prof Howarth, lead author of the Cornell study, added: “Carbon storage remains an idea that has little real-world testing. To the extent it has been tested, problems have clearly surfaced, such as leakage of carbon dioxide back to the atmosphere, and water pollution from the materials extracted from the storage due to the highly corrosive, high acidity of the storage material. It remains to be seen whether the technology can be developed in a safe, environmentally responsible way. It also remains to be seen how much this will cost.”

If CCS does not come through as EGAF predicts, then the value of shale gas in the fight against climate change becomes highly questionable.

Dutch MP shocked by devastation in Niger Delta

Published on : 7 January 2011 – 12:04pm | By Hélène Michaud

Dutch (opposition) Labour Party MP Sjoera Dikkers has just spent four days in Nigeria’s oil-rich Delta, in preparation for a parliamentary hearing on Royal Dutch Shell’s activities there.

Complex situation
Ms. Dikkers, a former activist with non-governmental organisations, told Radio Netherlands Worldwide that her visit made her realise the complexity of the situation, adding “shades of gray” to her picture of the Delta region. She said she almost longed for her activist days, “when companies were bad and NGO’s were good.”

On January 26, environmental, human rights, and scientific research organisations, along with representatives of Royal Dutch Shell plc, the main petroleum company in the Niger Delta, will be heard and questioned by Dutch parliamentarians. They will try to find out who should be held responsible for the extensive environmental degradation in that region.

“Open mind”
Ms Dikkers intends to take part in the discussions with an “open mind”.

“I’m not biased at all. But I’ve seen that Shell is by far not doing enough, and I’ve seen myself that the government, to say the least, is not helping. They are only making things worse. Most people who bunker(tap) oil illegally get military protection, which is a sign that government officials are very much involved and making huge amounts of money out of it.”

“There’s no very reliable data available and everybody’s telling you a different part of their story. So I have to digest all of this to get the whole picture and draw my own conclusions,” she adds.

Ms Dikkers, who mentioned that she had paid herself for her trip, was preceded in the Niger Delta by another member of the opposition, Sharon Gesthuizen (Socialist Party). Both lawmakers say they were shocked after flying above polluted parts of the Ogoni region and speaking with farmers who can no longer cultivate their land because of oil spills.

Can the Dutch parliament make a difference?
“I wish I could say yes, but I can only be a tiny, tiny part of the solution. If we could help get rid of the devastation in the Niger Delta by putting pressure on Shell and the local government, that would be great,” she says.

What kind of pressure?
“I don’t know right now. It would be fantastic if the outcome of the hearing would be that our parliament would end up investigating the activities of Shell in Nigeria, if a commission could come up with an independent view of the situation,” says Ms. Dikkers.

During her brief visit, Ms. Dikkers says she became aware that Nigerians in the Delta were more concerned about their livelihoods than environmental degradation.

“And that’s something that we have to bear in mind as well when we come up with solutions for the people here. It’s not up to me to dictate what should be happening on the ground. If cleaning up is not their primary concern and they have other concerns, then it would be good to look into that instead of pushing my own western agenda.”

Anger
Ms. Dikkers is grabbed with emotion when she answers our last question: Why should the Dutch parliament care about the Niger Delta?

“Shell is a Dutch company. If I didn’t care I wouldn’t have gone into politics… The oil that they get from there is put in my car. And I want to see that what I put in my car is not destroying somebody’s livelihood. That’s something I don’t want to accept. I’m very very upset about that, I’m very angry.”

“The world is watching,” a Nigerian newspaper wrote about what actions Ms. Dikkers and her fellow MP’s will take.

What is it about?

A 2009 report by Amnesty International on the impact of oil extraction in Nigeria concluded that “the people of the Niger Delta have seen their human rights undermined by oil companies that their government cannot or will not hold to account.”

The organisation called on governments of the home states of oil multinationals “to regulate how extractive companies operate at home and abroad.”

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Shell Says Repercussions of U.S. Drilling Moratorium Could Last Into 2012

Bloomberg

By Fred Pals and Eduard Gismatullin – Oct 28, 2010 11:53 AM GMT+0100

Royal Dutch Shell Plc, Europe’s largest oil company, warned that the knock-on effects of the temporary ban on new deep-water drilling in the Gulf of Mexico could last for the next two years.

Shell has booked charges of $115 million to date after idling rigs and expects further losses in the fourth quarter, Chief Financial Officer Simon Henry said today. Daily output from the region, which accounts for about a third of Shell’s total production in the Americas, will be 40,000 barrels less than previously expected in 2011.

“The moratorium and the delay to our drilling program is an opportunity lost,” Henry said on a conference call after Shell reported earnings that beat analyst estimates for the third straight quarter.

Earlier this month, the U.S. Interior Department issued new safety regulations and lifted the moratorium put in place after BP Plc’s Macondo well disaster. Shell pumped the equivalent of 230,000 barrels of oil a day in the first nine months of the year in the Gulf of Mexico, about 10,000 barrels a day less than would have been the case without the ban. “There could be a further impact in 2012,” Henry said.

Shell is the first of Europe’s biggest oil companies to have reported earnings. It was followed by Eni SpA, Italy’s largest energy producer, which reported a 48 percent increase in adjusted net income to 1.70 billion euros ($2.35 billion) because of higher oil prices. Total SA is scheduled to post results tomorrow and BP on Nov. 2.

Above Estimates

Excluding one-time items and inventory changes, Shell earned $4.9 billion in the third quarter. That beat the $4.3 billion mean estimate of 18 analysts surveyed by Bloomberg. Net income rose to $3.46 billion from $3.25 billion a year earlier, The Hague-based company said in a statement.

Chief Executive Officer Peter Voser said in a statement that Shell is in a “delivery window” with 13 new projects that will be started this year and next. Shell is reversing a seven- year decline in output at the same time BP struggles to recover from the worst oil spill in U.S. history.

“This is an excellent set of results,” said Peter Hutton, head of research at NCB Stockbrokers Ltd. in London. “It more than delivers on the expectation of momentum.”

Shell is targeting hard-to-reach rock formations in Australia, the U.S. and China, as well as projects in Qatar. Third-quarter production rose 5 percent to 3.058 million barrels of oil equivalent a day from 2.917 million barrels a year earlier.

LNG Sales

Liquefied natural-gas sales volumes increased to 4.26 million tons, with Shell citing “major contributions” from the Sakhalin II LNG project in Russia and Nigeria LNG.

Shell’s Class A shares traded in London rose 0.9 percent to 1,994.5 pence as of 11:20 a.m. The stock is up 6.3 percent this year, compared with a 29 percent decline for BP, which at one point lost more than half its market value as the costs of cleaning up the oil spill escalated.

Oil futures averaged $76.21 a barrel in the quarter, a 12 percent increase from a year earlier, and natural-gas futures rose 23 percent.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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Shell casts net wide for Prelude staff

Ms Pickard also made an offhand comment that Shell was not preparing to take over LNG-focused Woodside Petroleum Ltd, which is 34 per cent held by the Dutch company.

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Shell Moves Sakhalin LNG Manager to Australia to Lead $20 Billion Project

Bloomberg

By James Paton – Aug 26, 2010 4:48 AM GMT+0100

Royal Dutch Shell Plc has brought the former manager of Sakhalin-2, Russia’s first liquefied natural gas project, to Australia to oversee development of a proposed venture that may cost more than $20 billion.

Shell, OAO Gazprom’s partner in the $22 billion Russian project, assigned Hilary Mercer to the Queensland venture, Ann Pickard, chairman of the company’s Australian unit, said in an interview. Shell and PetroChina Co. this week completed the purchase of Arrow Energy Ltd., gaining gas for an LNG venture that may produce 16 million metric tons of fuel a year.

Mercer led construction at Sakhalin-2 in Russia’s far east, a development Shell calls “one of the most challenging engineering feats ever achieved.” Shell, BG Group Plc and ConocoPhillips are among companies planning rival Queensland ventures that would be the first in the world to convert coal- seam gas into LNG for export.

“There are enormous complexities with LNG projects, and cost overruns are a frequent issue,” Evgeny Solovyov, an analyst at Societe Generale, said by phone from London. “Shell is one of the best in the world as far as complex integrated energy projects are concerned, and LNG in particular.”

Mercer’s title is vice president of LNG and integration, Melbourne-based Shell spokesman Phil Connole said in an e-mail yesterday.

Shell may spend $50 billion in Australia over the next decade as Europe’s largest oil company continues a shift to gas, Pickard said in an Aug. 19 interview. In Australia, Shell is a partner in the A$43 billion Gorgon LNG project led by Chevron Corp. and plans to become the first to develop floating LNG ventures.

‘Fortifying Australia’

Shell said it aims to make a decision whether to proceed with the Curtis Island LNG development in Queensland by 2012. Pickard called the venture a “$20 billion plus” project and said Mercer is one of Shell’s “top project developers.”

Shell, which expects gas to account for more than half of its total production by 2012, is “fortifying its Australian business,” Societe Generale’s Solovyov said. “Sakhalin is an important project, but they did what needed to be done there.”

Sakhalin-2 is “equivalent in size to five world-scale projects, located in a hostile sub-arctic environment and covers a vast area in a region with almost no existing infrastructure,” Shell says on its website.

Moscow-based Gazprom wrested majority control of Sakhalin-2 from Shell in 2007 after government pressure over rising costs and environmental lapses. Shell in 2005 said the second phase of the project would cost $20 billion, double an initial estimate.

Asian Markets

The LNG plant started last year and allowed Russia, holder of the world’s biggest gas reserves, to export fuel to the Asia- Pacific. Gazprom controls Sakhalin Energy, operator of the Russian plant, and Shell owns 27.5 percent of the project. Mitsui & Co. holds 12.5 percent and Mitsubishi Corp. 10 percent.

Shell’s Pickard succeeded Russell Caplan as chairman in Australia after taking over in March as executive vice president of exploration and production for the country. She previously spent five years with Shell in Nigeria.

Andrew Faulkner, who joined Shell in 1982, became chief executive of Arrow following the A$3.5 billion ($3.1 billion) takeover of the gas company.

Santos Ltd., BG and ConocoPhillips partner Origin Energy Ltd. also plan projects in Queensland that will convert gas extracted from coal seams. LNG is gas compressed to a liquid for transportation by ship to destinations not linked by pipeline.

Shell may partner with Adelaide-based oil and gas producer Santos in developing LNG in Queensland, analysts including Aiden Bradley of Goldman Sachs & Partners Australia, have said.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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East Timor Proposes $3.8 Billion Gas Hub on its Soil

Australia’s second-largest oil and gas producer and its partners, including Royal Dutch Shell Plc, have opted to rely on floating liquefied natural gas technology for the development, saying that it will deliver the most revenue to both Australia and East Timor. The government of East Timor objects to any plan that doesn’t include a gas processing plant in the country.

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