Shell's Prelude FLNG to Start 2018

Shell's floating gas production and liquefaction vessel Prelude will come on stream offshore Australia next year, the company's CFO Jessica Uhl told journalists on a conference call May 4. By most benchmarks, that means the project has been delayed from its scheduled launch this year.

The company told NGW that work on the vessel -- with capacity to produce 3.6mn metric tons/yr of LNG, plus 1.7mn mt/yr of condensate and natural gas liquids -- was all but complete, declining to be specific on the engineering side but suggesting that now it was just a matter of tidying it up.

A spokeswoman said Shell would not comment on the timeline, but in response to a query about whether 2018 meant it had slipped from this year, she said that 2018 had been the date of start-up for years, since the days when Malcolm Brinded was upstream boss; however Prelude must leave the shipyard for western Australian waters this year to avoid the hurricane season, she said.

Nevertheless most reports by press and analysts have given 2017 as the scheduled start of operations, even though Shell has always said it expected 2018 to be the first year of material earnings from Prelude.

The 2016 annual report of the International LNG Importers Association (GIIGNL), published March 2017, said: "In 2017 three new projects should start commercial deliveries during the year: Wheatstone, Ichthys and Prelude FLNG" adding that "Shell’s giant FLNG Prelude (3.6mn mt/yr) is under construction and could be online before the end of 2017."  The International Gas Union's World Gas LNG Report published just one week later also gave Prelude's scheduled production start date as 2017. 

Japanese Inpex, with 17.5% in the project, says on its website that Prelude is expected to produce at "least 3.6mn mt/yr, along with 400,000 mt/yr of LPG and about 36,000 barrels of condensate/day at peak. First production is scheduled for 2017."

A tragic accident at the Geoje yard in South Korea May 1 has led to a stoppage of work at the Samsung Heavy Industries yard, but this will not have a material impact on Prelude, said Uhl, expressing sorrow for the families of the deceased. A crane collapsed killing six workers; they were working on Total's platform for the Martin Linge oilfield, for deployment offshore Norway. By time of press Total had not replied to an email from NGW seeking confirmation.

William Powell