General – Prelude
A small fire late Thursday night Dec 2 on Shell’s Prelude floating LNG vessel off the Kimberley Coast caused production at the $24 billion giant to be shut down and left the crew using backup power.
The Prelude was built in South Korea and towed to Australia in mid-2017, 18 months behind schedule, and did not produce LNG for another two years while problems with the complex facility were fixed.
In January 2020, six months after production started, NOPSEMA banned Shell from performing many maintenance tasks until it fixed its procedures for the safety-critical isolation of equipment before maintenance as there was a “significant risk to the health and safety of persons at the facility.”
Prelude was shut down for much of 2020 as more technical issues were addressed.
Shell has never revealed how much Prelude cost but it is understood to be at least $US17 billion ($24 billion), a 45 per cent cost blowout from initial estimates.
Prelude’s problems have led to subpar outcomes for both the owners of the vessel and the Australian government.
The cost overruns and schedule delays on the Prelude was the principal reason Shell, which owns 67.5 per cent of the vessel, slashed about $US8-9 billion off the value of its Australian LNG investments in 2020. Japan’s Inpex, which holds a 17.5 per cent stake in Prelude, wrote its value down by 37 per cent at the same time.
