After a decade of engineering research and financial planning Royal Dutch Shell is finally going ahead with its huge investment programme directed at Floating LNG.
The final investment decision was taken for the Prelude FLNG venture offshore northwest Australia to produce 3.5 million tonnes per annum of LNG - and opening the way for similar developments at other gas fields.
The FLNG facility being designed and built by South Korea’s Samsung Heavy Industries and France’s Technip will make its debut by tapping into about 3 trillion cubic feet equivalent of resources in the Prelude gas field and produce LNG by 2017.
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The Prelude FLNG project offshore north-west Australia will be operated by Shell and will be the first of many similar projects in the Asia-Pacific and elsewhere in the world. Prelude will be producing LNG from 2017 |
Partnership
Shell said its FID meant its technology partners Samsung and Technip could proceed with the construction of the first in a series of FLNG production hulls. The Prelude FLNG project will be the first Australian upstream project in which Shell is the operator. It will be located in the Browse Basin in the WA- 371-P permit area.
The Prelude gas was found in 2007 as an extension of the giant Ichthys gas field in the neighbouring WA-285-P permit block owned by Japan’s Inpex, but was a separated gas accumulation from Ichthys.
After making the discovery, Shell began investigating the use of a floating production, storage, and offloading vessel to develop the gas reserves. Traditionally, LNG projects need more than 5 Tcf of gas to construct offshore platforms, pipelines to shore and land based processing plants.
Economic
But the FLNG approach makes the current reserves economic to recover and with the possibility of additional marginal gas fields in the area being monetized. One such discovery close to Prelude is called Concerto and is 10 miles from Prelude.
Shell believes it has already advanced the Prelude FLNG project at a rapid pace, with first production of LNG expected some 10 years after the gas was discovered.
Shell has been steadily engaging with stakeholders ever since, concerning the Prelude FLNG project and the new application of existing technology.
The environmental impact statement was presented early on and Shell has engaged on a regular basis with Australian federal and state government ministers and departments
Meetings
These face-to-face meetings have included presentations on the project, explanations of FLNG facility technology and safety parameters.
The concept of FLNG was then introduced to a broader range of stakeholders, including non-government organisations, industry and Kimberley community representatives.
These engagements provided an opportunity for Shell to receive feedback on the concept and its general application to developing gas resources. Stakeholders were also briefed on the Environmental Referral which was submitted way back in April 2008.
Following the Prelude FLNG FID, Shell’s upstream investment in Australia should reach some $30 billion over the next five years, including the Prelude and Gorgon LNG projects, and on-going exploration and feasibility studies in the country.
From bow to stern, Shell’s FLNG facility will be 488 metres long, and will be the largest floating offshore facility in the world - longer than four soccer fields laid end to end, the company said.
When fully equipped and with its storage tanks full, it will weigh around 600,000 tonnes, roughly six times as much as the largest aircraft carrier. Some 260,000 tonnes of that weight will consist of steel.
Breakthrough
“Our innovative FLNG technology will allow us to develop offshore gas fields that otherwise would be too costly to develop,” said Malcolm Brinded, Shell’s Executive Director, Upstream International.
“Our decision to go ahead with this project is a true breakthrough for the LNG industry, giving it a significant boost to help meet the world’s growing demand for the cleanest-burning fossil fuel,” he added.
“FLNG technology is an exciting innovation, complementary to onshore LNG, which can help accelerate the development of gas resources,” he said. The facility has been designed to withstand the severest cyclones - those of Category 5.
Technology
Some 110,000 barrels of oil equivalent per day of expected production from Prelude should underpin 1.3 MTPA of condensate and 0.4 MTPA of liquefied petroleum gas as well as the 3.5 MTPA of LNG.
The FLNG facility will stay permanently moored at the Prelude gas field for 25 years, and in later development phases should produce from other fields in the area where Shell has an interest.
Ann Pickard, head of Shell in Australia, said: “This will be a game changer for the energy industry. We will be deploying this revolutionary technology first in Australian waters, where it will add another dimension to
Australia’s already vibrant gas industry.” Brinded added that “beyond this, our ambition is to develop more FLNG projects globally. Our design can accommodate a range of gas fields, and our strategic partnership with Technip and Samsung should enable us to apply it progressively faster for future projects.
We see opportunities around the world to work on other FLNG projects with governments, energy companies and customers.”
Shell’s decision to make FLNG a reality has culminated more than a decade of research and development. The French-Korean Technip-Samsung Consortium (TSC) is now proceeding with the construction of Shell’s first floating hull for processing LNG.
Detailed design of the facility will be undertaken by TSC at Technip’s operating centres in Paris, France, and Kuala Lumpur, Malaysia, and it will be built at the SHI shipyard on Geoje island in Korea.
Technip role
Thierry Pilenko, Chief Executive of Technip, said: “Once again Technip is a key partner of a visionary customer pushing back together the limits of technology.
“This great project is a real breakthrough for the energy industry and a true revolution for offshore natural gas developments.
“Technip is extremely pleased and proud to bring all the expertise, knowhow and skills of its three business segments - Subsea, Offshore and Onshore - all of which will be instrumental in the success of Prelude FLNG.
“Within our long-term relationship with Shell and SHI, we hope that this project will be the first of many,” Pilenko added.
The Chief Executive of SHI, In-Sik Roh said SHI believed the “strength of the partnership” with Shell and Technip would lead to success.
Ceremony
“We are confident that this project will help us solidify our position as a clear leader in FLNG construction and development,” he said.
The two executives were speaking at a ceremony in South Korea marking the advance of the Prelude FLNG project.
Matthias Bichsel, Projects and Technology director of Shell, pointed out that Shell’s FLNG team had “drawn on five decades of expertise in the areas of LNG technology, LNG shipping and engineering of offshore floating oil and gas installations.”
Bichsel added that the consortium “combines the strengths of each company to enable the delivery of an integrated FLNG facility.”
An article written by Barend Pek, General Manager LNG Front-End Development for Shell Projects and Technology, will be presented in full in the following pages, giving full technical details and explaining technological challenges.
Imaginative
“Floating liquefaction of natural gas or FLNG has captured the imagination of engineers and LNG business developers ever since it was first considered more than a decade ago. The concept is simple, but attractive,” says Pek.
With a number of FLNG technical hurdles resolved, a decline in new onshore LNG FIDs, and the difficulty of finding “easy” gas, FLNG projects have now gained significant interest.
“This is not a surprise given there is more than 300 Tcf of natural gas in fields in the 1-5 Tcf range - a large number of which are considered uneconomic due to their size and/or remoteness from shore, or a limited domestic gas market” says Pek.
Shell has long been committed to technology and innovation and is one of the pioneers of the LNG industry. In the early 1960s Shell participated in the first base-load LNG plant, which started up in Arzew, Algeria.
Shell has ownership in 11 liquefaction projects currently in operation or under construction and is a leader in LNG shipping.
“We also have a proven track record in marrying production technologies with offshore environments, successfully installing the world’s first floating production storage and off-loading (FPSO) vessel, the Castellon in Spain in 1977.
Challenging
“We now operate a number of FPSO’s around the world. Shell has a long history in creating innovative technologies to safely and reliably deliver energy to the world’s markets.
“FLNG technology is challenging, our investment in design and research over the last decade shows us this. We believe, however, that today we have identified and successfully cleared all technical show stoppers,” he said.
“Our significant experience in offshore field development, floating production facilities, LNG production and LNG transportation prepares us to be a pioneer in the development of FLNG.
“FLNG offers a route to greater flexibility and increased access to natural gas resources. It also enhances our ability to operate responsibly in environmental sensitive areas.
“The market circumstances, the environmental circumstances, and the technical maturity let us believe that FLNG has now grown up to become a very serious gas monetisation option.
There are numerous other challenges in FLNG projects, says Pek. His list includes: finding a suitable field, tuning the Upstream-FLNG interface, flow assurance, financing, insurance, partner alignment, LNG sales, buyers confidence, classification and certification, environmental permitting, approval of safety case, operational setup and logistics, maintainability, onshore supply bases, and more.
Combination
“In essence FLNG is a combination of the technologies applied on FPSOs, onshore LNG plants, and LNG shipping, all three of these ‘blood groups’ are complex in themselves, and have their own specific practices and approaches,” says Pek.
“An amount of effort was spent to obtain technical alignment over these interfaces. The available plot space for the topside facilities is about a factor of 4 smaller as compared to the space normally occupied for a similar sized onshore LNG Train.
“The operating plant is effectively built on top of the cryogenic LNG storage tanks which gives a series of additional constraints as compared to an LNG carrier receiving LNG pumped from atmospheric storage tanks,” Pek says.
“Furthermore we have learned the hard way that integration of the different cultures and practices of the three different business areas (blood groups) is as much a challenge as resolving the technical issues,” he adds.
Lay-out
The design and the lay-out of Shell FLNG plant is largely safety driven. Important elements are amongst others the location of living quarters, application of safety gaps, ventilation, design blast pressure profiles, cryogenic spills, refuge philosophy and risks for the LNG carrier.
“FLNG has huge potential to extend the portfolio of traditional LNG concepts necessary to meet the energy challenge of the 21st century. Technological and commercial challenges may have prevented FLNG succeeding to date, as evidenced by the fact that there are no FLNG facilities currently in operation,” says Pek.
“The market circumstances, the environmental circumstances, and the technical maturity lead us to believe that FLNG has now grown up to become a very serious gas monetization option,” he states.
The technical concept of the Shell FLNG plant, with some of its key technical challenges, and the inherent safety approach applied throughout the design, is described in the article in the following pages.
LNG Journal, Asia-Pacific Editorn
