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Dozens of LNG platforms to be developed – Shell

Dozens of floating liquefied natural gas (LNG) vessels will be developed by the energy industry over the next two decades, according to Royal Dutch Shell

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6:00AM BST 21 Oct 2013

Dozens of floating liquefied natural gas (LNG) vessels will be developed by the energy industry over the next two decades, unlocking major new gas reserves that could otherwise not be produced, Royal Dutch Shell has predicted.

Speaking on a visit to the first ever floating LNG vessel, Prelude, which Shell is constructing in a South Korean shipyard, chief executive Peter Voser said there was no reason why the technology would not take off worldwide.

LNG plants – where natural gas is liquefied for shipping by cooling it to minus 162 degees – have so far been based onshore.

Shell has developed FLNG for use on offshore gas fields where it is too difficult either to pipe the gas to land or to build the liquefaction plant onshore.

Mr Voser said: “In 20, 30 years, I could see a scenario that we would have a lot of floaters out there and that’s the prime technology used.”

He said there was estimated to be 800 trillion cubic feet of discovered gas in water depths of more than 200 metres. “If even a modest proportion of this gas is developed through floating LNG technology, the prize is really large.”

Jason Kenney, analyst at Santander, said: “Prelude is a leap forward in enabling the recovery of otherwise stranded gas resources. Floating LNG will allow the monetisation of gas reserves that otherwise would remain undeveloped.”

Mr Kenney said that the economics of developing FLNG were “challenging” but would “work as part of a portfolio of gas supply and development activity focused on long term flexible LNG supply contracts”.

Shell has declined to disclose the cost of Prelude, which will produce gas from a field offshore Australia, but analysts put it at $13bn. Shell insists it will make attractive returns.

Mr Voser said Shell itself was likely to have “a few” projects operational and one or two more being built in two decades’ time, while the wider industry could have developed “dozens” of FLNG vessels.

Since Shell began construction of Prelude, Malaysia’s Petronas has begun building a smaller FLNG plant, which could become operational before Shell’s, while US giant ExxonMobil is planning a project even bigger than Shell’s.


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