Royal Dutch Shell said yesterday it has begun output at its Prelude floating liquefied natural gas (FLNG) facility in Australia, the world's largest floating production structure and the last of a wave of eight LNG projects built in the country over the last decade.
Though the project started up later and cost more than originally estimated, it is expected to further cement Australia's lead as the world's biggest LNG exporter, after the country took the crown last month.
Shell said wells have now been opened at the Prelude facility, located 475km north-north-east of Broome in Western Australia.
This means Prelude has now entered start up and ramp up, the initial phase of production where gas and condensate - which is an ultra-light form of crude oil - are produced and moved through the facility.
Prelude is expected to have an annual LNG production capacity of 3.6 million tonnes, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of liquefied petroleum gas.
Shell did not immediately respond to queries on when first LNG will be exported from the facility, but analysts estimate exports to start by early next year, with condensates likely to start first.
"First LNG cargo is still several weeks assuming all proceeds as planned, but the timing of first cargo and pace of ramp-up is still subject to technical risk," said energy analyst Saul Kavonic of Credit Suisse in Sydney.
"Given Prelude's novelty, geographic conditions and challenges, it may be subject to greater risk... from wellhead production to first cargo than an average LNG project," he said.
"We expect Shell to seek to get it done right, rather than rush things."
Shell owns 67.5 per cent of the project, while Japan's Inpex Corp, Taiwan's CPC Corp and Korea Gas Corp hold the rest of the shares.
Australia overtook Qatar as the world's largest exporter of LNG for the first time last month, after the start up of a number of export projects over the past three years, most recently the Ichthys facility.
The start up of Prelude, following the ramp up in production at Ichthys and Russia's Yamal LNG, is expected to put pressure on the Asian market next year, said Mr Kittithat Promthaveepong, a senior analyst at FGE.
REUTERS
