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Shell Approves Floating LNG Project

May 20, 2011

By ROSS KELLY

SYDNEY—Royal Dutch Shell PLC on Friday approved construction of a giant vessel designed to chill natural gas for export at sea, allowing it to unlock gas deposits stranded hundreds of miles from land.

Similar vessels are being considered for several projects in deep water around the world where piping gas back to land to be liquefied would be too costly. Shell’s final investment approval for its Prelude floating liquefied natural gas development marks the first time that construction of such a vessel has been approved anywhere.

Demand for gas is soaring as nations seek to burn less coal and oil to cut emissions blamed for causing global warming. Interest is particularly strong among nations in Asia such as Japan, whose domestic gas supplies are low, and China and India, where rapidly developing economies are creating a growing need for fuel.

“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,” said Malcolm Brinded, executive director of Upstream International at Shell.

Bigger than an aircraft carrier, Prelude will float in waters off the northwestern coast of Australia. Conventional tankers would carry the LNG from the vessel to customers starting in 2016. Shell has already agreed to sell LNG from Prelude to Japan’s Osaka Gas Co.

Write to Ross Kelly at [email protected]

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