Shell Gets Clearance to Restart Prelude LNG

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Australia’s offshore regulator National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) has given Shell the all-clear to restart its operated floating Prelude LNG facility offshore Western Australia. But a restart date for the 3.6 million ton per year facility remains unclear.

Shell was forced to shut Prelude last December after a fire led to a complete loss of power. It had to restore power by turning to diesel backup power units.

A Shell spokesperson confirmed that Nopsema has given the clearance.

“We continue to work methodically through the stages in the process to prepare for hydrocarbon restart with safety and stability foremost in mind.” Without giving a firm restart date, the spokesperson said it would focus on ensuring the safety of its crew and stability of the facility.

The regulator said Shell did not sufficiently understand the power system on Prelude. It ordered the operator to stop production until it could demonstrate that it can keep Prelude safe if the power fails again. Nopsema has asked Shell to conduct a review and develop a detailed implementation plan for all corrective actions. Shell cannot restart Prelude until it demonstrates that it can safely recover essential power and associated essential services in the event of another power failure.

The imminent restart of Prelude would help ease current LNG supply tightness which has been exacerbated by an ongoing war in Ukraine. The war has triggered a stronger demand for LNG by European markets which are seeking to reduce their reliance on Russian pipeline gas.

The more than three-month shutdown of Prelude meant Shell was unable to take advantage of high LNG prices above $20 per million Btu, which are buoyed by strong demand and tight supply. Prior to the latest shutdown, Shell shut Prelude for more than six months following an electrical trip in February 2020.

LNG Supply, Liquefaction, Floating LNG, LNG Projects
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