Thursday, 4 August 2011

Shell unveils world's first FLNG

..platform, facility, or the biggest 'ship' on earth?

                                   (click to enlarge graphic)

Energy and petrochemical giant Shell will build a colossal first-of-its-kind floating liquefied natural gas (FLNG) platform. Observers are saying that the massive 600,000-tonne FLNG structure will be the world's biggest "ship" when built; Shell has not used any superlatives in its announcements; it prefers to call the yet unnamed FLNG platform a 'facility.' The FLNG will cost between $8bn and $15bn to build.

The facility will be six times the size of the largest US aircraft carrier, and will be built at the Samsung shipyard on Geoje Island in South Korea. Work is slated to commence in 2012, and the FLNG will be completed by 2017. It will then operate 120 miles off stunningly beautiful Kimberley Coast in Australia, and will tap into the huge natural gas reservoirs from the Shell's Prelude field there. Since the field is in a part of the world known as 'cyclone alley' where storms are severe and frequent, the structure will be strengthened to withstand the worst weather that the area can throw up.

"The traditional way of producing gas offshore was through pipelines. You brought gas up to a platform and piped it to the 'beach'. That is the way it's done in the North Sea," says Scotsman Neil Gilmour, Shell's general manager for FLNG. Instead of this, the new FLNG will tap into 'stranded gas' reservoirs, liquefy the gas on board and store it at -161C after purification, flaring off waste products. A large LNG tanker will dock approximately once a week, load and sail with enough gas aboard to, as the BBC says, "heat a city the size of London for a week."

The inherent advantage of an FLNG platform lies in its concept. With not much fixed infrastructure required, the platform can be stationed elsewhere when tapped reservoirs run out of gas. As analyst Johan Hedstrom says, "You don't need the pipeline or the onshore refinery and when you run out of gas you can just pull up stumps and go to the next field." The Shell FLNG is designed to have a lifespan of fifty years, the first twenty-five of which will be spent at the Prelude field. 

Environmentalists are opposing the Prelude project citing the potential for damage to the environment from oil spills or leaks, especially in an area prone to storms. The WWF says that underwater wellheads will damage the marine environment considerably, adding that the project alone will emit two million tonnes of greenhouse gases annually. However, Australia's Minister for Resources and Energy has welcomed Shell's plans, indicating that its environmental footprint is much smaller when contrasted with a land-based scheme.

Neil Gilmour says that Shell had to overcome a "raft of technical challenges", what with the storm prone area the FLNG would be operating in. The platform, he said, will be built to withstand "category-5 cyclones and even a one-in-10,000-year storm producing 300km/h (185mph) gusts and 20m-high (65ft) waves".

 "FLNG is a neat way of going forward," Johan Hedstrom says. "They could make a lot of money out of it. Shell is positioning itself in an emerging market, not just in China - where gas usage has increased by 20% - but in India, which is also increasing its demand." 

Large reservoirs of natural gas exist across the world, trapped thousands of miles away from land, where pipelines and other infrastructure do not exist. LNG prices have risen sharply as countries rethink nuclear options after the tsunami in Japan. Shell obviously expects the enterprise to be very lucrative for a long time to come.


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