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Starting a revolution: the decision to build a floating liquefied natural gas facility

Speech given by Malcolm Brinded, Executive Director, Upstream International, in Perth, Australia, May 20, 2011.
Malcolm Brinded

In this speech Malcolm Brinded, Executive Director, Upstream International, highlights the scale of the impact that the Shell FLNG facility will have. Of huge physical dimensions, it will be the first facility to produce and liquefy gas at sea. But more importantly, it will open opportunities to develop offshore gas fields that have till now been closed because of the need for subsea pipelines and land-based facilities. It may prove to be a major turning point for the global LNG market.

Starting a revolution: the decision to build a floating liquefied natural gas facility

I’m delighted to announce today Shell’s decision to commit itself to building a floating liquefied natural gas facility, or FLNG facility for short. Shell is the first and only company to have the courage, capital and confidence to take such a momentous decision.

We believe FLNG is a game-changer for the energy industry, and Shell is proud to be leading the way.

We will be deploying this revolutionary technology first in Australian waters, over the Prelude gas field, where it will cool the produced gas into a liquid on the spot. Ocean­going carriers will then offload the LNG as well as other liquid by-products for delivery to market.

This is big, ladies and gentlemen. Not just the decision to build the FLNG facility but also the facility itself. From bow to stern, Shell’s FLNG facility will be 488 metres. That’s almost half a kilometre! It will be the largest floating offshore facility in the world – longer than four football fields laid end to end. Almost as long – or so I’m told – as three MCGs end to end. When fully equipped, and with its storage tanks full, it will weigh around 600,000 tonnes – roughly six times as much as the largest aircraft carrier.
 
Our decision to go ahead with this project is a true breakthrough.

Not since the launch of the Murex in 1892 has a Shell vessel had as much potential to change the nature of the industry. The Murex was the first tanker to be allowed through the Suez Canal, thereby transforming the global kerosene market. The Shell FLNG facility will be the first facility to produce and liquefy gas at sea, and I hope will prove to be a major turning point for the global LNG market.

FLNG will change the rules of the game.  It will allow us to access stranded offshore gas fields that otherwise would be too costly or difficult to develop, because it avoids the need for long underwater pipelines and new coastal infrastructure.

It also enables LNG projects to go ahead more quickly and with less certainty about the volume of the gas resources being tapped, since an FLNG facility can be reused elsewhere at the end of a field’s life.

So FLNG is complementary to onshore LNG and with both in our inventory of technologies, Shell can bring more value to the table when we sit with governments, partners and customers.

Don’t let the simplicity of the concept fool you. Building an FLNG facility is not just a matter of putting a normal LNG plant on pontoons. It’s an entirely new hybrid. And that’s why no other company has built one...till now.
 
But Shell has a leg-up on the competition here. We benefit from our unmatched experience from one end of the gas value chain to the other, from the wellhead to the burner. We’ve been in the LNG business since the 1960s and over the last 15 years we’ve been involved in building and bringing on stream – on average – one multi-billion dollar LNG train every year.

We have experts in deepwater projects, floating production facilities, gas treatment and liquefaction, LNG carriers and marine operations as well as in LNG marketing and trading. Our engineering and commercial expertise has been key to making Shell FLNG a reality and I’m proud of the efforts that our team and partners have put into making this a world first.

FLNG has long captured the imagination of the industry’s engineers and marketers. We started a serious FLNG work programme in the mid nineties and progressed since then to safety studies, conceptual design, feasibility studies, and detailed engineering to validate and optimise the FLNG concept.

All in all, we spent several hundreds of millions of dollars on developing the technology before finally selecting the Prelude field for the technology’s debut.

And the time is now right, because the world needs more natural gas. It is the cleanest-burning fossil fuel. And the world needs every low-carbon source of energy it can find.

Shell expects global gas demand to jump by 50% between now and 2030.

And global LNG demand is likely to double just in this decade, driven by imports into a host of countries in Asia, the Middle East and Europe.

To take FLNG from the drawing board to reality, we rely on people and partnerships.

And of course Australians have been involved in Shell’s FLNG journey for over a decade. Since you have the right spirit for a project like Prelude FLNG and you know what it means to be pioneers.

Let me give you just an inkling of the frontier technology needed to realise this magnificent project.

One of the main design challenges is how to make all the necessary components fit together in a limited space. Our designers managed to fit everything on to an area roughly one-quarter the size of an onshore LNG plant of similar capacity. Even so, the Prelude FLNG facility will be a colossus.

Fortunately, the sheer size serves gives it stability in the open seas – even when buffeted by the 280-kilometres-per-hour winds of a Category 5 cyclone. This ability to ride out even the worst of storms saves valuable production days.
To design an FLNG facility that is safe, reliable and cost efficient, we opted for tried-and-tested processes and equipment. But the constraints of space and seaworthiness required the designers to assemble them in novel configurations.

Components had to be stacked on top of each other for example the operating plant had to be placed above the LNG storage tanks.

Another space-saving idea is to tap the depths of the ocean for cooling. An assembly of eight one-meter diameter pipes will dangle from the facility, taking in cooling water from 150 metres’ depth. They are specially designed, so they don’t flop around like the loose end of a squirting garden hose.

But the paramount focus has been on safety: making sure that we leave enough space, and have all the necessary protection equipment, to minimise risks, so Prelude FLNG will be as safe as any other modern offshore oil and gas facility, despite its great size and innovative duty.

Ladies and Gentlemen: I am an engineer at heart, so forgive me if I get excited about this spectacular technology. This project is an engineer’s dream... But ultimately FLNG serves one single purpose, to bring more gas successfully to market.

We have invested much time and effort to get to today. And I am especially grateful for the steadfast support we have received along the way from the federal government of Australia and the state of Western Australia.

And I want to thank Minister Ferguson and Premier Barnett for joining us here in person for today’s announcement...

We think that Prelude FLNG will be the first of many. We look forward to working with others, on the future FLNG projects, which will follow this Australian flagship bringing new sources of the cleanest burning fossil fuel to markets that clearly need it.

Thank you.