Revealed: Shell Abandons Massive LNG Project for Speedy Solution, Insiders Claim

LONDON, Sept 7 - In a strategic move, Shell weighed the option of pausing its innovative Prelude liquefied natural gas facility located off Australia for an entire year to address operational challenges. However, they ultimately decided on a briefer maintenance stint to tap into the robust gas demand, as shared by three insiders.

Boasting a deck span equivalent to over four soccer fields, Prelude stands as a pioneering floating LNG facility. Its innovative design came with a hefty price tag, believed to be upwards of $12 billion.

Stationed 475 km off Australia's western coast, Prelude has experienced its fair share of hitches since its debut in June 2019. These included a significant power outage caused by a fire in December 2021.

While the current two-month maintenance plan, initiated in August, aims to rectify several issues, some underlying design challenges may remain unresolved, the insiders noted. Consequently, the 3.6-million-ton-per-year LNG facility might face further hiccups.

A senior Shell official shared on Wednesday that Prelude is amidst a major overhaul estimated to span two months. Discussions surrounding a more extended maintenance period were not public knowledge until now.

Last year, Shell mulled over the idea of year-long repairs to Prelude to rectify certain design glitches, notably in its electrical system. But concerns about missing out on LNG sales during peak demand influenced their decision.

This shorter maintenance phase aligns with a period of tepid global LNG demand, positioning the plant for optimum operation as the winter demand uptick in regions like Europe and China begins.

A PROMISE OF ENHANCED RELIABILITY

Upon assuming his role in January, Shell's CEO Wael Sawan committed to elevating the firm's operational efficiency and financial health. Before his promotion, Sawan helmed Shell's LNG segment.

In response to the ongoing maintenance saga, Shell commented that such "turnarounds are routine in the maintenance of LNG facilities and are orchestrated well beforehand."

The company spokesperson highlighted that the current maintenance cycle for Prelude, which began in August, will span a few months. Originally slated for completion in 2022, it was postponed to August 2023 due to industry disturbances and the subsequent cyclone season.

Since its launch in 2019, Prelude has encountered numerous technical setbacks leading to about 500 days of closure. This includes much of 2022, a year marked by surging LNG prices post Russia's Ukraine incursion.

The ongoing repairs will address a myriad of issues, from electrical systems to machinery vibrations, shared the insiders. They further stated that while many pressing concerns will be addressed, complete reliability might remain elusive, hinting at possible future downtimes.

Cederic Cremers, a top executive at Shell's LNG vertical, shared on Wednesday that Prelude's "major turnaround" began in August and will stretch for about two months. He acknowledged some persisting minor challenges owing to the facility's pioneering nature but also noted a marked improvement in the first half of the current year.

Source : Reuters (Reporting by Ron Bousso)