By Thompson ABISOLA
Royal Dutch Shell said on Wednesday it has begun output at its
Prelude Floating Liquefied Natural Gas (FLNG) facility in Australia, the
world’s largest floating production structure.
It is also the last of a wave of eight LNG projects built in the country over
the last decade.
The project started up later and cost more than originally estimated.
It is expected to further cement Australia’s lead as the world’s biggest LNG
exporter, after the country took the crown in November.
In a statement, Shell said wells have now been opened at the Prelude facility,
located 475 kilometres north-north east of Broome in Western Australia.
This means Prelude has now entered start-up and ramp-up, the initial phase of
production where gas and condensate is produced and moved through the facility.
Condensate is an ultra-light form of crude oil.
Prelude is expected to have an annual LNG production capacity of 3.6 million
tonnes, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of
Liquefied Petroleum Gas (LPG).
Shell did not immediately respond to a media query on when first LNG will be
exported from the facility.
However, analysts estimate exports to start by early next year, with
condensates likely to start first.
“First LNG cargo is still several weeks assuming all proceeds as planned, but
the timing of first cargo and pace of ramp-up is still subject to technical
risk,” said Saul Kavonic.
Kavonic is energy analyst at Credit Suisse in Sydney.
“Given Prelude’s novelty, geographic conditions and challenges, it may be
subject to greater risk to timeline from wellhead production to first cargo
than an average LNG project.
“We expect Shell to seek to get it done right, rather than rush things,” he
said.
Shell owns 67.5 per cent of the project, while Japan’s Inpex Corp, Taiwan’s CPC
Corp and Korea Gas Corp hold the rest of the shares.
Australia overtook Qatar as the world’s largest exporter of LNG for the first
time in November.
This was after the start-up of a number of export projects over the past three
years, most recently the Ichthys facility.
“The start-up of Prelude, following the ramp-up in production at Ichthys and
Russia’s Yamal LNG is expected to put pressure on the Asian market next year,’’
said Kittithat Promthaveepong.
Promthaveepong is a senior analyst at FGE.
