Page 8 - GLNG Week 14

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Shell delays FID on Crux project in Australia
INVESTMENT
ROYAL Dutch Shell announced on April 7 that alongside its joint venture partners it had agreed to postpone a final investment decision (FID) on the proposed Crux gas project offshore Aus- tralia. The FID had previously been targeted for this year. The move – like other delays being announced currently – has been attributed to the global economic downturn, the collapse in oil prices and uncertainties relating to the coro- navirus (COVID-19) pandemic.
Shell’s joint venture partners in Crux are Osaka Gas and a unit of Seven Group Holdings. Gas from the project will be used to backfill the Prelude floating LNG (FLNG) facility in north- west Australia. Crux is one of several offshore gas fields in the region that have been awaiting devel- opment, but the schedules for these projects are now being pushed back as a global oversupply weighs on the LNG industry.
In late March, Woodside Petroleum announced deferrals for FIDs on three LNG-re- lated projects – the Scarborough offshore gas development, Browse LNG and Train 2 at the existing Pluto LNG facility. (See GLNG Week 13) The Scarborough project will be developed to supply backfill volumes to Pluto, similar to Shell’s approach to bringing Crux online in order to supply Prelude.
A Shell spokeswoman told Reuters this week that the company remains committed to devel- oping Crux.
“This is consistent with Shell’s global approach of actively managing all operational and financial levers, including reducing capital spend,” she said. Indeed, Shell pulled out of the proposed Lake Charles LNG project on the US Gulf Coast in late March in response to the new market conditions.
Prelude, the world’s largest FLNG facility, entered service in June 2019. Loadings from the facility are currently suspended following an electrical trip in February. Given the over- supplied market, in which a growing number of buyers is requesting to cancel or delay contracted cargoes, the outage has actually come at a rela- tively opportune time.
The facility has the capacity to produce at least 5.3mn tonnes per year (tpy) of liquids, comprised of 3.6mn tpy of LNG, 1.3mn tpy of condensate and 400,000 tpy of liquefied petro- leum gas (LPG).
Shell operates Prelude with a 67.5% interest, while Japan’s Inpex holds a 17.5% stake in the project, Korea Gas (KOGAS) has 10% and Tai- wan’s CPC owns 5%.
Shell’s plan for the development of Crux involves connecting the field to Prelude with a 165-km pipeline. The Crux project will consist of a not normally manned (NNM) platform with five production wells, in water depths of around 165 metres. The field will be operated remotely from Prelude. The project is anticipated to have a lifespan of at least 20 years, though this can be extended through future investments.
The front-end engineering design (FEED) process for Crux has already started in anticipa- tion of the now delayed FID.
Prelude FLNG currently sources its feedstock gas from the Prelude field, but Shell plans for the facility to have a multi-decade lifespan that will require additional sources of gas, of which Crux is set to be the first.
On its website, Shell shows Crux as being in operation from around 2025, but this will need to be revised to account for the deferral of the FID.™
Gas from the Crux project will be used to backfill the Prelude floating LNG facility.
The Crux project will consist of a not normally manned (NNM) platform with five production wells.
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w w w . N E W S B A S E . c o m Week 14 10•April•2020