FOUR DIFFERENT ARTICLES REPORTING ON FIRST PRELUDE LNG CARGO: TUESDAY 11 JUNE 2019
Sonali Paul: 11 JUNE 2019
* Prelude seals Australia as world’s top LNG exporter
* Prelude marks last of Australia’s $200 bln LNG construction boom
* Start-up comes amid glut in LNG market
* Rival Ichthys LNG could sap some Prelude gas reserves (Adds comment on Prelude gas sources)
By Sonali Paul
MELBOURNE, June 11 (Reuters) – Royal Dutch Shell on Monday shipped the long-awaited first cargo of liquefied natural gas from its massive Prelude floating LNG plant off northwest Australia, sealing the nation’s position as the world’s top exporter of the fuel.
The start-up comes just as spot LNG prices have sunk to their lowest in over three years, with new projects in Australia and the United States boosting global supply while demand in Asia was dented by a mild winter.
Prelude is the last of eight LNG plants built on Australia’s eastern and northwestern coasts in a $200 billion LNG construction boom over the past decade.
Its first cargo had been targeted for 2018, but was delayed by a string of teething problems at the world’s biggest floating vessel. The 490-metre long (1,600 ft) ship is longer than four soccer fields and six times bigger than the world’s largest aircraft carriers.
Shell declined to comment on the cost of Prelude, but consultancy Wood Mackenzie estimates it at around $17 billion.
“Today’s first shipment of LNG departed from Prelude FLNG, safely,” Shell’s integrated gas and new energies director, Maarten Wetselaar, said in a statement.
The cargo on the Valencia Knutsen LNG tanker is going to customers in Asia, Shell said, without giving the size of the shipment.
Prelude is expected to produce 3.6 million tonnes a year of LNG, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of liquefied petroleum gas (LPG).
The project is jointly owned by Shell, Japan’s Inpex Corp , Korea Gas Corp and Overseas Petroleum and Investment Corp, a unit of Taiwan’s CPC Corp.
Shell had expected Prelude to be the world’s first floating LNG project, but was beaten by Malaysia’s Petronas, which shipped the first cargo from its PFLNG Satu project two years ago. Prelude is the world’s biggest floating LNG plant, however.
It took two years from the time the vessel was first moored on top of the fields that feed it to ship the first LNG cargo.
“How fast Prelude delivers its second and third cargo and ramps up to plateau output will be a key indicator of success,” said Daniel Toleman, an analyst at Wood Mackenzie.
Chris Meredith, another Wood Mackenzie analyst, earlier said it was no surprise that Prelude had faced lengthy delays.
“It’s such a novel technology and an isolated location. It was always going to be difficult,” he told Reuters in an interview in late May.
OVERLAP
Inpex’s $40 billion Ichthys project at an onshore plant in Darwin has more than double the LNG capacity of Prelude at 8.9 million tonnes a year. That development shipped its first LNG cargo last October, also following lengthy delays.
Shell and Inpex had been racing each other to bring their projects online as the Ichthys field partly overlaps the Prelude gas field, which is one of two fields feeding the floating LNG project. The other is called Concerto.
Besides starting ahead of Prelude, Ichthys ramped up to full capacity faster than expected, with Wood Mackenzie and another consultancy, EnergyQuest, both estimating it reached full capacity within about seven months of start-up.
“As a result of Ichthys starting up earlier, there might be some negative impact on Prelude’s reserves,” Toleman said.
Shell has already started design work to develop another field, Crux, to help keep Prelude FLNG filled from 2025, according to a plan filed to Australia’s offshore petroleum regulator.
“At this stage we see Crux coming in at 2025. That’s quite a short production plateau for Prelude. I can’t think of any analogues for LNG projects that have had that short a plateau on the initial project,” Toleman said.
Shell and Inpex were not immediately available to comment on the impact on Prelude from Ichthys’ earlier start-up.
Reporting by Sonali Paul; Editing by Richard Pullin and Joseph Radford
RELATED ARTICLE
S&P Global Platts: Shell ships first LNG cargo from Prelude FLNG project in Australia
- AuthorEric Yep Takeo Kumagai
- EditorWendy Wells
- CommodityNatural Gas
Singapore — Shell has shipped its first LNG cargo from the Prelude floating liquefied natural gas or FLNG facility offshore Western Australia, on the vessel Valencia Knutsen to customers in Asia, the oil major said Tuesday in a statement.
The shipment marks the startup of one of the most anticipated LNG projects in the world and will boost Australia’s LNG export volumes as it ramps up capacity in coming months.
“Today’s first shipment of LNG departed from Prelude FLNG, safely,” Shell’s Integrated Gas and New Energies Director Maarten Wetselaar said. “Prelude forms an integral part of our global portfolio and plays an important role in meeting the growing demand for more and cleaner energy for our customers around the world.”
Prelude FLNG will produce 3.6 million mt/year of LNG, 1.3 million mt/year of condensate and 0.4 million mt/year of LPG at full capacity. It is operated by Shell with a 67.5% interest in a joint venture with Japan’s Inpex with 17.5%, South Korea’s Kogas with 10% and Taiwan’s Overseas Petroleum and Investment Corp with 5%.
Prelude started gas production from the wellhead in December 2018 and began shipping condensate in March 2019.
“The first [LNG] cargo was more than eight years after FID and nearly two years after the facility arrived in Australia. How fast Prelude delivers its second and third cargo, and ramps up to plateau output, will be a key indicator of success,” Wood Mackenzie senior analyst Daniel Toleman said.
“The Prelude facility will be backfilled by Crux, which entered FEED this year. We expect a FID late next year with first production in 2025,” Coleman said. He said Shell will spud the Bratwurst exploration well later this year and if a significant gas resource is discovered, it is likely to be developed via the Prelude facility.
Inpex said it will supply its equity portion of LNG from Prelude at plateau production to trading company JERA and Shizuoka Gas, at 0.56 million mt/year and 0.07 million mt/year respectively, contributing to stable energy supply to Japan. It expects Prelude FLNG to have a minimal impact on its financial results for the fiscal year ending December 2019, but expects it to add to revenue and cash flow for the fiscal year ending December 2020.
“With Prelude on stream, Australia is on track to export more than 80 million mt/year of LNG, which surpasses Qatar as the largest LNG producer in the world,” Coleman said, adding that the project marks the end of the Australian greenfield LNG boom.
–Eric Yep and Takeo Kumagai, newsdesk@spglobal.com
–Edited by Wendy Wells, wendy.wells@spglobal.com
RELATED ARTICLE
Almost two years after sailing into Australian waters Shell’s giant Prelude — the biggest offshore facility ever constructed — has at last shipped its first cargo of LNG.
As flagged by The West Australian last week, Shell and joint venture partners Inpex, Kogas and OPIC this morning announced Spanish carrier Valencia Knutsen had left Prelude, 475km north-east of Broome, with a full load of LNG for customers in Asia.
Maarten Wetselaar, Shell integrated gas and new energies director, said it was an important milestone in the floating LNG project.
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