* World's biggest vessel afloat for the first time
* Structure also world's first ocean-based LNG facility
* Shell plans more vessels like Prelude
* Even bigger model is also on drawing board
* Floating LNG could change gas industry economics
By Andrew Callus
LONDON, Dec 3 (Reuters) - It will be the biggest thing eversent to sea - but as the Prelude FLNG vessel was launched onTuesday, plans were already under way for something bigger.
With a bow and stern half a kilometre apart, four footballpitches would fit on Prelude's deck were it not for a clutter ofkit towering up to 93 metres high that will draw gas from underthe sea bed for dispatch to Asia by the boatload.
Now, as the partly-built structure floats out of dry dockfor the first time, developer Royal Dutch Shell wantsto consolidate its advantage as the first mover in FloatingLiquefied Natural Gas (FLNG) - an as-yet untried technology forwhich Prelude will be the flagship.
The oil company's technicians are designing something evenlarger and tougher than Prelude, a vessel that will need to last25 years moored in the Indian Ocean's "cyclone alley" offAustralia's northwest coast, producing enough gas to supply acity the size of Hong Kong.
"Yes we will move bigger and move into more extremeenvironments," Bruce Steenson, Shell's general manager ofintegrated gas programmes and innovation told Reuters last week."We are designing a larger facility ... That will be the nextcar off the rails."
Prelude, which analysts says may cost over $12 billion tobuild and which is due to be producing by 2017, is a potentialgame changer for the oil and gas industry.
If it is an economic success, gas fields worldwide that aretoo far out to sea and too small to develop any other way couldbecome viable for LNG production.
Making the first-ever FLNG unit even more of a focus as ittakes shape in Samsung Heavy Industries' Geojeshipyard in South Korea, the prototype vessel's most likelyfirst copy model of similar size will now be for the Browseproject - another venture for gas off Australia.
"DESIGN ONE, BUILD MANY"
Escalating costs forced backers to dump their original,land-based LNG plant plans, and in September this year, theydecided to go ahead with Shell's FLNG technology instead.
"The Browse structure will be 90 percent the same asPrelude," Steenson told Reuters on the sidelines of aconference, citing the "design one, build many" mantra Shellhopes will eventually pay off and placate shareholders worriedabout the firm's total $45 billion-a-year capital spending bill.
Browse's developer, Woodside Petroleum, said inOctober it may use as many as three of the FLNG vessels Shell isdeveloping along with Samsung Heavy and oil and gas engineersTechnip.
An even bigger FLNG plant than the ones to be built forPrelude and Browse could make life more interesting for thecompetition - a wide range of land-based "wannabe" LNG exportersin Canada, Russia and east Africa, all hoping to tap burgeoningAsian gas demand the same way a number of Australian andU.S-based LNG developments will over the coming few years.
Anchored about 200 km (125 miles) off the Australian coast,Prelude will chill the gas to reduce its volume by a factor of600 and load it on to specialised LNG tankers.
Prelude will only produce about 3.6 million tonnes a year(mtpa) of LNG along with its 5.3 mtpa of liquids and otherhydrocarbons - a fraction of some land-based LNG plants.
Steenson envisages a bigger version could produce far more -giving it economies of scale closer to those to be enjoyed bybigger land-based producing plants such as Gorgon, a 15.6 mtpaplant taking shape on northwest Australia's coast to tapoffshore gas.
Gorgon, led by Shell's U.S.-based rival Chevron,should be producing in early 2015, well ahead of Prelude, but itis way over budget and now scheduled to cost $52 billion againstan original $37 billion. Plans for a land-based Browse plantwere cancelled this year as its likely cost reached $45 billion,and as the outlook for global gas demand faltered.
OCEAN ACCESS
Shell has shied away from offering estimates of Prelude'slikely cost, but analysts say FLNG could end up less expensive.They have put the cost of Prelude at $10.8-$12.6 billion.
At 600,000 tonnes with its storage tanks full, Prelude willbe vast, but it takes up just a quarter of the space aland-based LNG plant of a similar capacity would occupy becausecomponents are stacked on top of each other.
LNG plants need access to the ocean anyway so that LNGtankers can load. FLNG eliminates the need for land purchase andreduces environmental objections. With cooling water straightfrom the ocean and gas tipped piped straight into LNG tankers,there is no need for long seabed pipelines and jettyconstruction.
Shell's earliest FLNG designs were made in the 1990s butended up shelved because of economic recession and technicaldifficulties. Shell started looking again at the idea in theearly 2000s, but it was the discovery of the Prelude field in2007 - too small and too remote to develop any other way - thatgave the technology its first shot in the real world.
A final investment decision was taken to go ahead with488-metre long Prelude in 2011. Its keel was laid in May thisyear and two giant sections of its hull built on opposite sidesof the harbour were joined together in the summer at GeojeIsland.
As was the case with the pioneering design, the bigger FLNGvessel design awaits a suitable gas discovery to match it,Steenson said at the London Business School's annual globalenergy summit.
