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The Prelude floating LNG (FLNG) facility.

performed incorrectly, and needed to be redone. board the vessel was cited by media as saying the
The loss of LNG production as a result of the restart had some issues with “multiple trips” of
outage is thought to be costing several million the plant and two swivels inside the turret that
dollars per day. moors the giant LNG facility in place. And Shell
Chevron is also due to take Trains 1 and 3 is reported to have suspended gas flows to Prel-
offline to inspect the heat exchangers for simi- ude as a precaution.
lar issues, and now says it hopes that the work There is now speculation that Prelude –
at Train 2 can help those inspections – and any which is thought to be one of the most complex
necessary repairs – to be more efficient. Initially, LNG facilities in the world, as well as the largest
there were suggested that the entire facility FLNG project – may not be back online until
would have to be shut down, but Chevron has 2021. However, no further details were available
agreed a staggered shutdown schedule with this week. The facility has been offline since Feb-
regulators. ruary as a result of technical issues.
The issues with the kettles are the latest in a Prelude has a production capacity of 5.3mn
series of setbacks for the 15.6mn tonne per year tpy of liquids, with LNG accounting for 68% or
(tpy) Gorgon LNG project, which suffered cost 3.6mn tpy. However, full production capacity has
blowouts and delays during construction, and not been reached at the facility to date since it
subsequently struggled to start up. Until the began operations in December 2018.
shutdown of Train 2, however, the facility had
recently been performing more reliably. What next?
Chevron operates Gorgon with a 47.3% stake. The outages at Prelude and Gorgon Train 2 are
Shell and ExxonMobil each own 25% interests helping LNG spot prices for delivery to north
in the project, while Japanese firms Osaka Gas, Asia. In the week up to September 4, the spot
Tokyo Gas and JERA hold minority stakes of price of cargoes for October delivery rose to
1.25%, 1% and 0.417% respectively. $4.50 per million British thermal units ($124.47
Chevron noted that it continues to meet its per 1,000 cubic metres), marking an eight-
contractual obligations to provide gas to the month high. This was also an increase of 143%
Western Australian domestic market and LNG on record lows of around $1.85 per mmBtu
to international markets throughout the outage ($51.17 per 1,000 cubic metres), which were
at Gorgon. The super-major has offtake agree- seen in May.
ments in place for the facility with Japanese and While LNG producers will welcome this
South Korean customers. trend, analysts have warned that there is not
much evidence of a significant demand recov-
Restart troubles ery yet, with prices instead being propped up by
Meanwhile, Shell said on September 4 that it had supply issues.
begun restart procedures at its Prelude FLNG LNG producers will be hoping that the com-
facility and the gas fields offshore Broome that ing winter will be colder than the last one, and
supply feedstock to the vessel. that there will be no more large-scale lockdowns
However, Shell is reported to have run into needed to contain any new waves of COVID-19
challenges almost immediately. A source on infection spikes.™

Week 36 10•September•2020 www. NEWSBASE .com P13