RE: Prelude23 Aug 2020 09:10
The giant floating facility, 488 meters (about 1,601 feet) long and able to accommodate 300 workers, can park directly above a gas field and process its output into liquefied natural gas that can then be transferred to other vessels and shipped around the world. Traditionally, gas had to be piped under the ocean to a processing facility onshore, which made tapping some remote fields too costly.
Prelude is capable of supplying enough liquefied natural gas to meet about half of Washington state's annual natural-gas demand. It was particularly complex to construct because it was built to operate in deep and sometimes rough seas, and processes gas into three products: liquefied natural gas, liquefied petroleum gas and natural-gas condensate.
"They went with this very large, very complex, not off-the-shelf technology; they developed it as a bespoke project, and I guess we'll know over the next 20 years, was that a successful decision?" said Jason Feer, head of business intelligence at consulting firm Poten & Partners Inc.
Major energy companies have made big bets on natural gas, but its role in the energy mix is in flux as more countries make a transition to low-carbon sources. Some environmental groups are lobbying for a wholesale shift from all fossil fuels, which could affect the economic viability of remote gas projects such as the one Shell financed near Australia.
Shell says that while the virus has hit demand for natural gas, it still believes the fundamentals of liquefied natural gas, or LNG, remain strong. It says demand for LNG grew by 12.5% to 359 million metric tons in 2019 and that it expects long-term LNG demand to grow by about 4% a year.
"Where we said in the past we will have stronger growth in LNG than in any aspect of the carbon-based energy system, I still believe that is the case," Shell Chief Executive Ben van Beurden said on the company's earnings call in July.
Still, given this year's fall in global demand, analysts say Shell would likely have needed to cut some of its production from facilities such as Prelude in the short term anyway, lessening the impact of its current problems.
"This has been an enforced cut back of production for them which undoubtedly they are not happy about, but there is a silver lining," said Mr. Feer.
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