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The Prelude debacle

Extract from the Seeking Alpha article by Fluidsdoc dated 7 Dec 2021:

Royal Dutch Shell: The Wind Farm At The End Of The Universe

The Prelude debacle

Shell gets a lot of credit for being an able and experienced project manager, and when it’s their core business, they are. By comparison, Prelude, an FLNG project, has to be considered a financial and technical disaster by any measure, and a lot of that involves mistakes by Shell. An article from last year notes-

While the Prelude did export LNG at about half its capacity for the second half of 2019, it is now idle.

Moored far off the Kimberley coast it is plagued with technical problems, dwindling gas reserves and safety processes condemned by the regulator despite Shell and its partners spending about $US19.3 billion ($A30.0 billion) to the end of 2019. Shell has escaped scrutiny over Prelude’s cost by not issuing an estimate when the project was sanctioned or supplying updates during construction.

Shell chief executive Ben van Beurden was asked about the cost of Prelude in 2018.

“We don’t disclose cost on projects, so I’m also not in a position to disclose whether it is any different to what we have previously not disclosed and I don’t want to make an exception in this case,” van Beurden said.

Source

Well that is certainly opaque, but consistent with the way they are reporting renewables.

Prelude now sits idle after a fire suspended operations last Thursday. Not a great deal of damage was done, but there is an Australian agency investigation underway that will delay things while it is ongoing.

I bring this up at this point in the article to point out, Shell puts out some pretty blithe assumptions about the new horizons they have laid out for their future energy mix. As Prelude has shown, horizons can recede and be very costly to attain.

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