* World's biggest vessel afloat for the first time
* Structure also world's first ocean-based LNG facility
* Shell plans more vessels like Prelude
* Even bigger model is also on drawing board
* Floating LNG could change gas industry economics
By Andrew Callus
LONDON, Dec 3 It will be the biggest thing ever
sent to sea - but as the Prelude FLNG vessel was launched on
Tuesday, plans were already under way for something bigger.
With a bow and stern half a kilometre apart, four football
pitches would fit on Prelude's deck were it not for a clutter of
kit towering up to 93 metres high that will draw gas from under
the sea bed for dispatch to Asia by the boatload.
Now, as the partly-built structure floats out of dry dock
for the first time, developer Royal Dutch Shell wants
to consolidate its advantage as the first mover in Floating
Liquefied Natural Gas (FLNG) - an as-yet untried technology for
which Prelude will be the flagship.
The oil company's technicians are designing something even
larger and tougher than Prelude, a vessel that will need to last
25 years moored in the Indian Ocean's "cyclone alley" off
Australia's northwest coast, producing enough gas to supply a
city the size of Hong Kong.
"Yes we will move bigger and move into more extreme
environments," Bruce Steenson, Shell's general manager of
integrated gas programmes and innovation told Reuters last week.
"We are designing a larger facility ... That will be the next
car off the rails."
Prelude, which analysts says may cost over $12 billion to
build and which is due to be producing by 2017, is a potential
game changer for the oil and gas industry.
If it is an economic success, gas fields worldwide that are
too far out to sea and too small to develop any other way could
become viable for LNG production.
Making the first-ever FLNG unit even more of a focus as it
takes shape in Samsung Heavy Industries' Geoje
shipyard in South Korea, the prototype vessel's most likely
first copy model of similar size will now be for the Browse
project - another venture for gas off Australia.
"DESIGN ONE, BUILD MANY"
Escalating costs forced backers to dump their original,
land-based LNG plant plans, and in September this year, they
decided to go ahead with Shell's FLNG technology instead.
"The Browse structure will be 90 percent the same as
Prelude," Steenson told Reuters on the sidelines of a
conference, citing the "design one, build many" mantra Shell
hopes will eventually pay off and placate shareholders worried
about the firm's total $45 billion-a-year capital spending bill.
Browse's developer, Woodside Petroleum, said in
October it may use as many as three of the FLNG vessels Shell is
developing along with Samsung Heavy and oil and gas engineers
An even bigger FLNG plant than the ones to be built for
Prelude and Browse could make life more interesting for the
competition - a wide range of land-based "wannabe" LNG exporters
in Canada, Russia and east Africa, all hoping to tap burgeoning
Asian gas demand the same way a number of Australian and
U.S-based LNG developments will over the coming few years.
Anchored about 200 km (125 miles) off the Australian coast,
Prelude will chill the gas to reduce its volume by a factor of
600 and load it on to specialised LNG tankers.
Prelude will only produce about 3.6 million tonnes a year
(mtpa) of LNG along with its 5.3 mtpa of liquids and other
hydrocarbons - a fraction of some land-based LNG plants.
Steenson envisages a bigger version could produce far more -
giving it economies of scale closer to those to be enjoyed by
bigger land-based producing plants such as Gorgon, a 15.6 mtpa
plant taking shape on northwest Australia's coast to tap
Gorgon, led by Shell's U.S.-based rival Chevron,
should be producing in early 2015, well ahead of Prelude, but it
is way over budget and now scheduled to cost $52 billion against
an original $37 billion. Plans for a land-based Browse plant
were cancelled this year as its likely cost reached $45 billion,
and as the outlook for global gas demand faltered.
Shell has shied away from offering estimates of Prelude's
likely cost, but analysts say FLNG could end up less expensive.
They have put the cost of Prelude at $10.8-$12.6 billion.
At 600,000 tonnes with its storage tanks full, Prelude will
be vast, but it takes up just a quarter of the space a
land-based LNG plant of a similar capacity would occupy because
components are stacked on top of each other.
LNG plants need access to the ocean anyway so that LNG
tankers can load. FLNG eliminates the need for land purchase and
reduces environmental objections. With cooling water straight
from the ocean and gas tipped piped straight into LNG tankers,
there is no need for long seabed pipelines and jetty
Shell's earliest FLNG designs were made in the 1990s but
ended up shelved because of economic recession and technical
difficulties. Shell started looking again at the idea in the
early 2000s, but it was the discovery of the Prelude field in
2007 - too small and too remote to develop any other way - that
gave the technology its first shot in the real world.
A final investment decision was taken to go ahead with
488-metre long Prelude in 2011. Its keel was laid in May this
year and two giant sections of its hull built on opposite sides
of the harbour were joined together in the summer at Geoje
As was the case with the pioneering design, the bigger FLNG
vessel design awaits a suitable gas discovery to match it,
Steenson said at the London Business School's annual global