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Shell restarts LNG shipments from giant floating gas site

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Shell restarts LNG shipments from giant floating gas site

: TUESDAY 12 APRIL 2022

Shell has restarted shipments of liquefied natural gas (LNG) from Prelude, its massive floating plant off the coast of Western Australia.

This follows operations at the world’s largest floating object being halted for four months after a fire and safety scare.

The oil and gas giant has confirmed the Prelude facility resumed shipping cargos after demonstrating to regulators that it was safe to do so.

Theoretically, Prelude capable of supplying 3.6m tonnes of liquefied natural gas (LNG) per year – close to one per cent of global demand.

LNG is natural gas that has been cooled to liquid form for ease of travel and storage, and has become an increasingly key resource for Asian economies amid post-lockdown rebounds in demand, and for the European Union (EU) as it looks to reduce its reliance on Russian fossil fuels.

Markets remain tight, prices historically high amid fears of supply shortages, meaning the reopening of Prelude could provide relief to worried buyers.

Prelude designed to tap gas in a remote location about 120 miles off the coast of Australia.

However, it has been plagued with difficulties such as spiralling construction costs – which have risen from $11bn to $17bn.

It has also never achieved its target output, with a lengthy shutdown for much of 2020.

In December last year, it had to shut down again after a fire resulted in power outages, with seven members of staff receiving medical treatment for heat-related conditions.

The vessel was considered at risk of “catastrophic failure”, with back-up diesel generators failing while steel structures near the LNG tanks cooled to dangerously low levels.

This led to Australia’s offshore regulator, the National Offshore Petroleum Safety and Environmental Management Authority barring it from restarting until Shell could demonstrate the facility’s safety after a loss of power.

It closed the case last month, enabling Shell to resume operations.

The developments will be encouraging for Shell after announcing a £5bn write-down following its withdrawal from Russia.

It has also announced plans to invest up to £25bn in the UK – amid continued calls from the Labour Party for a windfall tax.

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