Shell's Prelude FLNG Ships First Cargo (Update)

(Updates with comment from Wood Mackenzie)

Shell-operated Prelude FLNG facility, located 475 km northeast of Broome in Western Australia, has shipped its first LNG cargo, Shell Australia said June 11.

This shipment will be delivered to customers in Asia, Shell Australia added. “Today’s first shipment of LNG departed from Prelude FLNG, safely. Everyone involved should be very proud of the work taken to reach this important milestone,” Shell’s integrated gas and new energies director, Maarten Wetselaar, said in a statement.

Prelude is expected to produce 3.6mn mt/yr of LNG; 1.3mn mt/yr of condensate and 0.4mn mt/yr of LPG.

“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,” Wetselaar added.

The project involves developing the Prelude and Concerto gas fields and separating and liquefying the produced gas at the FLNG facility.

Shell is the operator of the project with 67.5% interest; Japan’s Inpex has 17.5% interest; Taiwan’s CPC 5% and Kogas 10%. Shell never committed itself to a start-up date or commented on the cost but it was expected by many in the industry to have come on stream some years ago. The final investment decision (FID) was more than eight years ago and the facility arrived in Australia almost two years ago. And the first delivery coincides with a glut of LNG, with low spot prices in Asia and Europe at around $5-6/mn Btu. 

Now the real test starts: WoodMac

Commenting, consultancy Wood Mackenzie said that a key indicator of success will be how fast Prelude delivers its second and third cargo, and ramps up to plateau output. "Shell will be keen to ramp up to full production quickly to counteract any reserves impact from the already producing and connected Ichthys field," it said. Japanese Inpex is the operator of the much larger Ichthys LNG project.

"The Prelude facility will be backfilled by Crux, which entered front-end engineering and design this year. We expect an FID late next year with first production in 2025. In addition, later this year Shell will spud the Bratwurst exploration well. If a significant gas resource is discovered it is likely these volumes will be developed via the Prelude facility, WoodMac said.  

"With Prelude onstream, Australia is on track to export more than 80mn mt/year of LNG, which surpasses Qatar [78mn mt/yr] as the largest LNG producer in the world.

"The completion of Prelude marks the end of the Australian greenfield LNG boom. The next investment cycle is already in sight, with backfill projects – Scarborough, Barossa, Browse, Arrow and Crux – vying for FID," it concluded.

Banner image courtesy Shell