Shell to build world’s first floating natural gas liquifier

Stephen Beard May 20, 2011
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Shell to build world’s first floating natural gas liquifier

Stephen Beard May 20, 2011
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STEVE CHIOTAKIS: Oil giant Royal Dutch Shell said today it’ll begin building a giant ocean vessel designed to liquify natural gas at sea. The vessel will be called Prelude. It could dramatically increase the supply of off-shore natural gas.

Marketplace’s Stephen Beard is with us live from London with the latest on that story. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: So what more do we know about this big, big ship?

BEARD: Well, we know as you say that it is going to be big — 1,600 feet long at least. Six times heavier than the biggest aircraft carrier — and with a price tag to match. Somewhere between $10- and $12 billion. As you say, it will liquify natural gas at sea. So you don’t have to pipe it hundreds of miles to the shore to be liquified.

Here’s Nick MacGregor of brokers Redmayne-Bentley.

NICK MACGREGOR: Transferring natural gas from off-shore oil sites, on-shore to liquify it adds to the price. The idea here is that this will safe that money and bring a lot of marginal natural gas projects into the investment horizons of the oil majors.

The plan is to have this huge vessel operating off the coast of Australia supplying the fast going Asian market within 5 years.

CHIOTAKIS: Ten-billion-dollars is what we’re talking about here Stephen. That’s a big investment. How risky is it?

BEARD: Well, the risk is that shale gas will prove more popular. Extracting gas from shale is cheaper than importing LNG. Shale gas has vertically wiped out LNG demand in the U.S. Now, if China develops its shale reserves, that could be a blow. But Shell clearly believes that overall demand for natural gas is growing so fast, there’ll be more than enough room for LNG.

CHIOTAKIS: Marketplace’s Stephen Beard. Stephen thanks.

BEARD: OK Steve.

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