Money Matters - Simplified

Shell to go ahead with floating LNG project

The $10 billion LNG vessel will have the capacity to process as much as 110,000 barrels of oil per day.

It will surely be extremely large, approximately the size of four football fields put together. That’s what Royal Dutch Shell intends to build, as it bets big time on liquefied natural gas (LNG) in Asia.

The proposed floating vessel, with apparatus to convert natural gas into a liquid, will be stationed over a gas field 125 miles off the coast of Australia.

Huge investment, huge returns
The $10 billion LNG vessel will have the capacity to process as much as 110,000 barrels of oil per day. The Hague, Netherlands based Shell intends to sell the LNG produced to the Asian consumers.

The first shipment from the facility is expected as early as 2016, said a source familiar with the matter. As per the current plans, the LNG would remain parked in one place for a quarter of a century before moving on to its next destination.

"Our innovative technology will allow us to develop offshore gas fields that otherwise would be too costly to develop," said Malcolm Brinded, Shell's executive director for upstream.

"Our decision to go ahead with this project is a true breakthrough for the LNG industry, giving it a significant boost to help meet the world's growing demand for the cleanest-burning fossil fuel," added Brinded.

The project which was given a go ahead after going through nearly 3,000 engineering drawings and a plethora of regulatory and environmental approvals is likely to be completed in few years.

The first shipment from the facility is expected as early as 2016, said a source familiar with the matter. As per the current plans, the LNG would remain parked in one place for a quarter of a century before moving on to its next destination.

About LNG
LNG, predominantly methane, is converted temporarily to liquid form for ease of storage or transport. The odorless, colorless and non-toxic LNG takes up about 1/600th the volume of natural gas in the gaseous state.

This decrease in volume makes it really cost efficient to move the gas to far flung places where pipelines are not present. Such mobility of natural gas has roused the interest of Asian countries in this form of fuel which does away with the evils of high carbon emissions.

It is precisely such advantages that have led the European oil and gas super major to come up with a 600,000 metric tons structure of which 260,000 tons would be just steel.

Given its weight and strength, a Category 5 cyclone would not be able to do any harm to the vessel.