Shell's Prelude Floating LNG Plant Leaves South Korea for Australian Waters

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Royal Dutch Shell PLC's (RDSA) massive floating gas-export vessel, the biggest of its kind, has left its South Korean shipyard for natural-gas fields off Australia's northwest coast.

Continue Reading Below

The Prelude floating liquefied natural gas plant will slowly make its way to where it will join a number of other big LNG ventures dotted around Australia that have positioned the country to overtake Qatar as the world's biggest exporter of the fuel in the coming years. Tens of billions of dollars have been invested by international and local energy companies in recent years, betting on rising demand for cleaner-burning energy in Asia.

Prelude left the yard in South Korea early Thursday, being towed toward Australia to eventually be chained to the ocean floor, Shell said. The journey marks a major milestone for the project, setting it up to begin producing LNG for customers globally and cash flow for Shell from next year, it added.

Prelude is the flagship project for the emergence of floating LNG, and more complex and versatile than other floating projects, said Saul Kavonic, an analyst at Wood Mackenzie in Western Australia.

"The sail away of the world's largest man-made floating structure is a major milestone for Shell, Australia and the LNG industry," he said.

Mr. Kavonic said commissioning of Prelude is likely to take a further nine to 12 months, with the first cargo of fuel likely by mid-2018.

Continue Reading Below

Although floating LNG plants are expected by industry analysts to remain niche compared with traditional onshore plants, 2017 has been already been a big year for the technology. In early April, Malaysia's state oil firm, Petroliam Nasional Bhd., or Petronas, loaded the first cargo onto a ship from its new 1.2-million-tons-a-year PFLNG Satu floating operation in the Kanowit gas field off Sarawak. And in June, Italy's ENI SpA kicked off its Coral South floating LNG project in Mozambique.

But in 2016, Woodside Petroleum Ltd. (WPL.AU) and partners including Shell shelved plans for the Browse floating LNG project in response to the slump in oil prices.

Shell made the decision to invest in the Prelude project just over six years ago, and began construction in late 2012. The keel was laid the following May, as assembly of the hull in a dry dock was begun ahead of the turret and topside being fitted at Samsung Heavy Industry's Geoje shipyard in South Korea.

The floating gas plant is 1,601 feet long, equivalent to more than four soccer fields, and weighs about 600,000 metric tons, displacing six times as much water as the largest aircraft carrier, according to Shell's plans.

Despite its massive size, it is about one-quarter the scale of an equivalent plant on land, with technology adapted for a floating environment and components stacked vertically.

When positioned in the Browse Basin, about 300 miles from the coast of Western Australia, the vessel will be moored to four chains held to the sea floor. According to Shell, it has been designed to withstand severe weather, with thrusters able to steady it during production and offloading.

The facility will be able to produce 3.6 million tons of LNG a year, plus volumes of other liquid fuels. Up to 140 people will be on the vessel during normal operations, although that would double during heavy maintenance periods.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

June 29, 2017 07:11 ET (11:11 GMT)