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Prelude FLNG project relegated to the backburner

FLNG projects – mega tankers fitted with gas extraction and liquefaction facilities – allow producers to tap offshore gas wells and ship LNG without having to build costly pipelines to onshore plants. Owners can move the vessels to new fields when production at an old one ends, slashing asset end-of-life costs.

By Mark Tay: Reuters 6 March 2017

SINGAPORE: Once considered the future of gas production, floating liquefied natural gas (FLNG) projects have been firmly relegated to the backburner as global gas producers seek cheaper ways to compete with a surge in U.S. shale supplies and slumping prices.

…a combination of the massive costs of outfitting a tanker with the necessary equipment – into spaces a fraction of the size of land-based installations – and a collapse in benchmark gas prices has halted interest in adding to the two current projects – Royal Dutch Shell‘s long-delayed $12.6 billion Prelude project off northwest Australia…

Shell has been a major proponent of FLNG, but spot prices have halved since the major reached its final investment decision (FID) on Prelude in May 2011.

“There was maybe an expectation when Prelude was being conceived that this was the future and every LNG project would look like that,” said Shell’s executive vice president Steve Hill at a media briefing in Singapore last month.

“I think that got kind of superseded by the U.S. being the primary source of new LNG supply ..

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