Shell sells idea of floating LNG

Shell has defended its proposed $12 billion Prelude floating LNG project off the Kimberley coast insisting it would make a significant contribution to the Australian economy.

Premier Colin Barnett has strongly opposed the use of floating LNG technology on offshore WA oil and gas projects, arguing it will cost local jobs, deny benefits to indigenous groups and cost the State royalties.

But Shell Australia’s general manager for production, Michael Schoch, told a conference in Perth last week that Prelude would bring benefits to Australia of some $45 billion over the life of the project, $12 billion of which would be paid in taxes.

“The overwhelming majority of people who work on the floating LNG facility will be Australians,” he said.

“By 2015, we expect to double the workforce in Shell Australia’s Perth office from 500 to 1000. Many of these new people will be working on Prelude.”

Shell’s Prelude project is under construction in various locations across the globe.

The Prelude and Concerto gas field have about three trillion cubic feet of liquids-rich gas.

Shell says the relatively small size of the gas fields and their remote location make them an ideal candidate for development via its FLNG technology as it would not be economic to develop the gas via a conventional onshore LNG processing plant.

Shell also argues FLNG has lower project costs and environmental affects compared with a traditional onshore LNG development. Production from Prelude could begin as early as 2016.

WA MPs on both sides of politics fear the proposed offshore Prelude project will hit State royalties, as it falls mainly outside State waters.

Unions also oppose floating LNG because they fear it produces fewer jobs, with positions more likely to go to cheaper, foreign workers.

Woodside is eyeing FLNG technology for its bigger Browse project after abandoning plans for an onshore processing hub at James Price Point near Broome because of prohibitive costs.

Mr Schoch was at the Australian Gas Technology Conference at the Perth Convention and Exhibition Centre last week.