LNG, Markets, Offshore, Projects

Shell Chair seeks security for LNG industry

In a speech made to the Committee of Economic Development Australia in Perth, Mr Caplan was enthusiastic about the future of the LNG industry in Australia saying “We already hear Gorgon being described as a single fiscal stimulus package for Australia, and we need more [projects] like it.”?

He went on to praise the innovation of the coal seam gas industry for turning what had been seen my coal miners as a problem into “a significant contribution to the energy mix in the eastern states”?.

Mr Caplan’s enthusiasm for the future of LNG projects in Australia was however tempered by the magnitude of the task. “The scope, complexity and cost of these projects cannot be underestimated,”? he said.

“A key requirement for industry is investment certainty and incentive to explore and to invest the huge amounts of money necessary to commercialise gas…Where genuine efforts are being made to understand and find a way to develop these resources, it is vital that leases are not taken away.”?

Mr Caplan stressed several times the critical requirement of security of tenure in the industry. He acknowledged that Australia’s track record on this issue was good but encouraged governments to continue to make improvements in the area. In particular, he welcomed the Commonwealth Government’s discussions paper on retention lease policy for canvassing “options for greater transparency, greater certainty and more rigorous application of the commerciality test”?.

Shell has its own stake in the LNG industry though its wholly-owned Prelude Gas field and as a partner in the proposed Gorgon LNG Development and the Browse Gas Project, all located offshore Western Australia.

The company recently awarded Samsung and Technip contracts to design, construct and install multiple floating LNG (FLNG) facilities over a period of up to fifteen years. The contract also outlines terms of front-end engineering and design (FEED) works for Shell’s 3.5 million tonnes per annum FLNG facilities.

FLNG facilities have the potential to place gas liquefaction facilities directly over offshore gas fields, eliminating the need for long distance pipelines, or extensive onshore infrastructure.

Shell has previously said that it will use floating processing facilities for its proposed Prelude Gas Field. The company has also said it will make a final decision about the project by the end of 2009.

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