Shell, Chevron Improve Australian LNG Competitiveness with Technology

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Leading energy developers, Chevron Corp. and Royal Dutch Shell plc, have urged Western Australia to continue to develop as a hub for technology to improve its competitiveness in the global liquefied natural gas (LNG) industry.

With Australia forecast to become the world’s leading exporter of LNG by 2020, Shell and Chevron have established a strong presence in Western Australia and its capital city, Perth, as they develop projects offshore the state’s northwest.

Prelude FLNG Factbox

 

    • Facility deck is longer than 4 soccer fields
    • 175 Olympic-sized swimming pools could hold same amount of liquid as the facility’s storage tanks
    • 6,700 horsepower thrusters will be used to position the facility
    • The turret is 305 feet tall and runs through the facility, secured to the seabed by mooring lines
    • Prelude FLNG facility will stay at the location for 20-25 years to develop the gas fields
  •  

Source: Shell

The two companies, which both hold leading stakes in the Gorgon LNG development within their Western Australia portfolios, have focused on utilizing technologies to help provide a competitive edge on the projects.

For Shell this will involve the world’s first use of the floating LNG (FLNG) technology at its Prelude project, while Chevron has continued to invest heavily at its Perth Global Technology Centre, which was established by the company in 2007.

CHEVRON SEES KEY ROLE FOR PERTH GLOBAL TECHNOLOGY CENTER

Speaking at the Australasian Oil & Gas (AOG) Exhibition & Conference in Perth March 11, Richard Hinkley, Chevron’s manager of the technology centre, said with developments in Western Australia at risk competitively, due to factors including a high cost environment, it was an opportune time to be innovative through technology.

“There is a genuine opportunity for technology to help us find ways to do things more effectively, smarter and to drive down costs. It is going to take collaboration,” Hinkley explained.

“Our priority is to create global solutions, locally, and we can see this as a competitive advantage.”

Since 2009 Chevron has invested more than $1 billion in technological initiatives at the Perth centre to help improve the competiveness of its projects, which in Western Australia include Gorgon, Wheatstone, Barrow Island and North West Shelf.

These upstream assets help to make the company Australia’s largest holder of natural gas resources with 50 trillion cubic feet (Tcf), Hinkley explained.

“Technology can impact on cost but to get a set change on cost it is important to understand where the highest costs are on projects to make sure we are focusing on the right technologies to unlock the most reserves,” Hinkley said.

He added: “When we fast-forward it is not about replacing people but to use technology to help improve performance on the capital cost side.”

FLNG VITAL TO SHELL’S GROWTH PLAN IN AUSTRALIA

Despite FLNG technology being met with opposition within Western Australia in the past, Shell’s plan to utilize a vessel to unlock the Prelude resource was given the go-ahead and the project is making good progress, according to Neil Gilmour, Shell’s vice president of development for gas.

Gilmour explained at AOG that innovative methods, such as FLNG, were important in managing current industry challenges, such as a high cost environment.

“Innovation is not necessarily about new pieces of technology but what it can be about is innovative ways of combining and imitating things that are already proven – a good example of this is FLNG,” Gilmour said.

“It gives us the opportunity to open up new energy resources, clusters from smaller fields and potentially larger fields through the use of multiple FLNG facilities.

“We think with Shell and its partners, and with some of the relationships we have here (in Australia), makes us uniquely positioned to make this a success.”

Gilmour said in Australia Shell was aiming to add a further 7 million tonnes per annum (Mtpa) to its LNG profile, which currently sits at 22 Mtpa, adding that technologies like FLNG were vital to achieving ongoing growth.

“We need to innovate both to ensure our existing Australian business and future projects remain competitive,” Gilmour said.

“This obviously includes utilizing the technology of Prelude but it also means to be innovative about the way in which we develop future projects and look at our supply chains.”

The hull for Prelude, which is in the Browse Basin, was launched in December 2013.

Although Chevron has not been a vocal backer of FLNG, Hinkley also expressed support for the technology in Australia.

“It’s not surprising that the industry is looking at innovative ways to reduce cost in the absence of signals that Australia is going to regain its competitiveness,” Hinkley said.

“If the high cost environment can’t be addressed then floating LNG is clearly going to remain on the table.”

 

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