Prelude FLNG to Stay Shut in 1Q 2022

Oil major Shell expects its Prelude FLNG unit in Australia, the world's largest unit of the type, will remain shut for most of the first quarter of 2022.

The world's largest FLNG facility had in January 2021 resumed LNG cargo shipments, almost one year after a shutdown caused by an electrical trip, only to be shut down again in December 2021 after a sudden loss of power, and subsequent failed attempts to re-establish reliable power aboard.

At a Q&A Thursday, as part of Shell's results presentation, CEO Ben Van Beurden told reporters that Prelude would stay shut for most of the first quarter of 2021.

Van Beurden said: "Prelude is going through teething troubles, quite a few teething troubles, of course, but bear in mind this is a unique asset, with, of course, quite unique challenges, as you can imagine.“

"As a matter of fact, [..] it had a pretty good reliability run in the second half of last year. But then[...] in December, we encountered a fault, an electrical fault in one of the battery systems that are associated with the uninterruptible power supply and we need to resolve these issues comprehensively and carefully before we restart."

"It's not been made easy because of the pandemic, as you can imagine. It's a remote facility, it's difficult to get people in, to get a vendor specialist it means that that person will need to quarantine for weeks before they can go on board. So, these problems compound the issue a little bit.“

"But also, we just want to make sure that, whenever we restart, we know that we have solved the problem, and that we can do so safely.“

"We work very closely with NOPSEMA, the regulator, to do so.“

"But indeed, [Prelude FLNG] is out at this point in time, and, for now, we expect it to be out for most of Q1.“

NOPSEMA Order

To remind, Australian oil and gas industry safety regulator NOPSEMA ordered Shell in December 2021 to keep the Prelude FLNG facility shut until it can convince the regulator that it can keep the facility properly powered and that the safety systems are operational.

NOPSEMA said at the time that the loss of power had impacted the habitation and working conditions of the personnel on the facility, and that by December 6, 2021, the failure to restore reliable power was seen to represent an ongoing impact and risk to the health and safety of the person on the facility and NOPSEMA arranged to visit the facility.

 According to NOPSEMA, the power failures directly impacted emergency response capability, operation of safety-critical equipment (e.g., communications, access to safety-critical documentation and information, Permit to Work System), and evacuation of personnel by helicopter or boat.

Essential services such as lighting, safety systems, communication systems, potable water systems, sewage treatment and HVAC were affected, too, with seven people treated for heat-related conditions).

The functionality of process equipment required to effectively manage the LNG inventory was also affected.

NOPSEMA thus ordered Shell to keep the LNG production from the Prelude FLNG unit shut, until it can "demonstrate to NOPSEMA’s satisfaction that the facility can safely recover essential power and associated essential services following a loss of power, and that the safety systems and essential support systems operate to maintain safety of personnel."

The 488 meters long, Shell-operated Prelude FLNG unit forms part of an offshore development that produces natural gas from the remote namesake field approximately 475km north-northeast of Broome in Western Australia.

The first LNG shipment from the project - originally sanctioned in 2011 - was shipped back in June 2019, via the Valencia Knutsen LNG tanker to customers in Asia. Shell is the operator of the project, with other partners being INPEX, CPC, and KOGAS.

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