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Shell’s giant $24b Prelude LNG ship shut down after fire

Western Australia Today

Shell’s giant $24b Prelude LNG ship shut down after fire

By Peter Milne

A fire late Thursday night on Shell’s Prelude floating LNG vessel off the Kimberley coast caused production at the $24 billion giant to be shut down and left the crew using backup power.

A small fire was detected at about 11pm in an electrical equipment area on the world’s largest vessel that can accommodate more than 200 crew.

A Shell spokesman said the fire triggered automatic fire systems and was extinguished before it spread further and all workers were safe and accounted for.

“The incident resulted in the loss of main power and the facility is currently operating on backup diesel generators,” the spokesman said.

“While work is under way to restore main power, production on the Prelude has been suspended temporarily.”

A spokeswoman for offshore safety regulator NOPSEMA said it had been informed of the fire by Shell and started an investigation.

Any fire at a gas plant is potentially serious compared to a land-based facility, but Prelude has additional problems of nearby workers’ accommodation and distant assistance if required.

The fire comes after the 488 metre-long Prelude had achieved steady production for some time after a string of problems in its first few years moored 475 kilometres north-east of Broome.

The Prelude was built in South Korea and towed to Australia in mid-2017, 18 months behind schedule, and did not produce LNG for another two years while problems with the complex facility were fixed.

In January 2020, six months after production started, NOPSEMA banned Shell from performing many maintenance tasks until it fixed its procedures for the safety-critical isolation of equipment before maintenance as there was a “significant risk to the health and safety of persons at the facility.”

Prelude was shut down for much of 2020 as more technical issues were addressed.

Shell has never revealed how much Prelude cost but it is understood to be at least $US17 billion ($24 billion), a 45 per cent cost blowout from initial estimates.

Prelude’s problems have led to subpar outcomes for both the owners of the vessel and the Australian government.

The cost overruns and schedule delays on the Prelude was the principal reason Shell, which owns 67.5 per cent of the vessel, slashed about $US8-9 billion off the value of its Australian LNG investments in 2020. Japan’s Inpex, which holds a 17.5 per cent stake in Prelude, wrote its value down by 37 per cent at the same time.

Shell’s 2020 accounts revealed the Dutch giant expected to never pay for the gas it extracted at Prelude as it would never be profitable enough to need to make payments under the federal government’s Petroleum Resource Rent Tax.

Woodside considered floating LNG for its Browse gas fields but abandoned the concept in 2016 in favour of piping the gas 900 kilometres to its existing North West Shelf LNG plant near Karratha.

SOURCE

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