Royal Dutch Shell plc said Friday it will develop the Prelude floating liquefied natural gas (FLNG) project in Australia. It is to be the world’s first FLNG facility and would be moored about 124 miles from the Australia shore.

The project was announced about 18 months ago (see Daily GPI, Oct. 9, 2009). The decision to move ahead with the project means that Shell, which will be 100% owner, is ready to start detailed design and construction of what it said will be the world’s largest floating offshore facility, in a shipyard in South Korea.

“This will be a game-changer for the energy industry,” said Ann Pickard, country chair of Shell in Australia. “We will be deploying this revolutionary technology first in Australian waters, where it will add another dimension to Australia’s already vibrant gas industry.”

Prelude will be more than 1,600 feet long, which is longer than four soccer fields laid end to end, Shell said. When fully equipped and with its storage tanks full, it will weigh about 600,000 metric tons, roughly six times as much as the largest aircraft carrier.

“Our innovative FLNG technology will allow us to develop offshore gas fields that otherwise would be too costly to develop,” said Malcolm Brinded, Shell executive director for upstream. “FLNG technology is an exciting innovation, complementary to onshore LNG, which can help accelerate the development of gas resources”.

The facility has been designed to withstand the severest cyclones, those of Category 5. Ocean-going LNG carriers will offload LNG and other products, directly from the facility for delivery to markets worldwide. The liquefaction of offshore gas has always involved piping the gas to a land-based plant, Shell said.

The first production of LNG aboard Prelude is expected about 2017. The facility will tap about 3 Tcfe of resources contained in the Prelude gas field, which Shell discovered in 2007.

Some 110,000 boe/d of expected production from Prelude should underpin at least 5.3 million metric tons/year of liquids, comprising 3.6 metric tons/year of LNG, 1.3 metric tons/year of condensate and 0.4 metric tons/year of liquefied petroleum gas. 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, the company said.

“Beyond this, our ambition is to develop more FLNG projects globally,” Brinded said. “We see opportunities around the world to work on other FLNG projects with governments, energy companies and customers.”

Shell’s decision to proceed with a FLNG strategy follows more than a decade of research and development (see Daily GPI, July 29, 2009). It builds on the company’s knowledge in offshore production, gas liquefaction and LNG shipping.

Last year a Wood Mackenzie consultant said FLNG would play a niche role in the natural gas world (see Daily GPI, April 21, 2010).

The Prelude FLNG project will be the first Australian upstream project in which Shell is the operator. Australia is one of Shell’s key growth provinces, and Shell’s upstream investment in Australia should reach some $30 billion over the next five years, including the Prelude and Gorgon projects, and ongoing exploration and feasibility studies in the country, the company said.

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