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Shell’s LNG-Producing Monster Ship, Prelude

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On Geoje Island, off the coast of South Korea, as many as 5,000 workers have been building the largest vessel ever constructed. With a deck the size of seven football fields and containing three times as much steel as the Golden Gate Bridge, the Prelude will spend years anchored above a natural gas field off Australia, pumping fuel from under the seabed and turning it into a liquid that can be shipped to Asian customers.

Led by Royal Dutch Shell (RDS/A), the project could transform the global gas industry. Until now, liquefied natural gas projects, which chill the fuel until it turns into a liquid that can be transported on tankers, have relied on giant onshore plants. Putting an LNG facility on top of a ship will open up dozens of fields once considered too remote or too small to be viable. “It’s a very crucial technology,” says Shell Chief Executive Officer Peter Voser, who rates approving the project as the single most important decision he’s made while running the Anglo-Dutch company. “This will be a solution that works for many, many fields.”

The ship, being built by Samsung Heavy Industries (010140:KS), goes first to a field 200 kilometers off Australia. Each year it will produce 3.6 million tons of LNG, enough to supply a city the size of Hong Kong.

Now that the hull’s complete, engineers will start installing the kit that liquefies the gas, including more than 220 kilometers of pipe. The pieces that make the turret, a tower that tethers the front of the ship to the seafloor, will all have arrived by the end of March. It could be 2017 before the Prelude is finished, towed to Australia, connected to the field, and producing gas.

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Shell’s world-first floating LNG plant coming together in leaps and bounds

15 November 2013

Shell’s $12 billion Prelude floating LNG structure, being built at Samsung’s Geoje Island shipyard in South Korea, has recorded another milestone with the vessel’s hull completed.

Once constructed, Prelude will be the largest floating structure ever built and will be permanently moored about 200km from the West Australian coast during its 25 years of production.

The structure will fill ocean carriers with gas ready for export from the sea, eliminating the need for gas pipelines and onshore processing facilities.

Prelude is expected to produce 3.6 million tonnes per annum of LNG, as well as volumes of condensate and liquefied petroleum gas.

Construction of the vessel will require around 26,000 tonnes of steel, 2000 km of pipework and 220,000 km of cabling.

Shell has said there would about 350 people working on Prelude by 2017 and 650 indirect jobs, with the project set to inject $45 billion to the Australian economy over its lifetime.

Australian Chris Moreno, commissioning and start up superintendent for Prelude, will be in charge of bringing first gas aboard the structure, in a world-first which is expected to take place in 2016.

In an interview with The Australian, Moreno said the prospect of making history was exciting.

“We all understand what we are working on,” he said.

“It’s the first of a kind – you never get to experience this kind of novelty before. You are going to have a lot of butterflies … [but] we have spent a lot of time and money getting the quality right, so when we get offshore and we press that big red button, we know what we are doing and how we ramp up and get to full production.”

Moreno said FLNG was becoming an increasingly attractive option when looking to develop offshore gas fields, as the cost structure is significantly lower than onshore alternatives.

“I personally saw that, particularly in Australia, there were becoming increased challenges with using onshore options,” Moreno said.

“A lot of them were not technical; a lot of them were to do with political aspects, with traditional landowners and with cost inflation. So a lot of these things were pushing traditional options into a very difficult area. I made a bit of a deal on the side with my [soon-to-be] boss and said: ‘If I perform, I want to be put on Prelude’.”

Shell Australia’s former chairwoman Ann Pickard has previously touted FLNG as the saviour of LNG development in Australia.

“We do see it as probably the potential saviour of the Australian LNG industry over the next decade or so.”

“Australian LNG is the highest cost globally,” she said, stating that countries like the United States and Canada could export to Japan 20 per cent cheaper

As Australian Mining recently reported, Prelude asset manager, Jim Marshall, said the project was progressing as planned.

“The project is progressing to schedule and we are really seeing activity ramping up at locations around the world,” he said.

The project is set to bring together engineering feats from across the globe.

Closer to home, Perth based contractor Pressure Dynamics has delivered three hydraulic power units, while Shell recently awarded the construction and design contract for the Darwin onshore supply base to Western Australian Company Decimal.

However the project has seen opposition from West Australian Premier Colin Barnett who says the development of FLNG will mean less jobs and gas supplies for Australia.

But Shell have been steadfast in their promise to employ from within Australia.

Shell Australia general manager Steven Phimister said the company was committed to hiring locals.

“We are recruiting on an Australian-first principal,” he said.

Shell said they are working closely with local institutions, government and industry to train and develop workers so they can become fully experienced and capable operating staff.

The gas giant has teamed up with Curtain University and the Challenger Institute to develop a FLNG training consortium.

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