Production on Shell’s problematic Prelude FLNG, the largest floating plant for natural gas liquefaction in the world, has once again been temporarily suspended. Reports by both Bloomberg and Reuters are citing a spokesperson from Shell Australia confirming that there has been another small incident aboard the beleaguered unit coming just as winter demand for LNG is surging.
Details on the latest incident are limited, but Shell reportedly confirmed that there was a small fire aboard the FLNG on December 21. Bloomberg is saying that it was quickly extinguished using handheld devices but that all production was again suspended pending a new investigation.
Reports are indicating that they had just restarted shipments from the FLNG after nearly two months of planned maintenance. Last summer, media reports in Australia had said that the offshore safety regulator NOPSEMA was looking into the site and critical of maintenance for the project.
The latest incident comes just a year after a similar fire took the vessel offline for nearly five months. In December 2021, Shell reported a fire started in an electrical compartment aboard the Prelude. In that instance, they reported the fire systems detected the blaze and brought it under control. However, the facility lost power shortly after the fire broke out. Shell evacuated all non-essential personnel, leaving only a skeleton crew of responders after that incident.
Located about 300 miles north east of Broome in Western Australia, Shell, which is partnered with INPEX, KOGAS, and OPIC, on the project, completed the first shipment of LNG from the Prelude in June 2019. Plans called for the facility to have an annual capacity of approximately 3.6 million tonnes, but in reality, the troubled facility has rarely lived up to its expected potential. It has been plagued by breakdowns and recently labor issues.
The Prelude resumed full service in April 2022 after overhauls based on the issues discovered after the December power outage. However, months later the company found itself caught in a contentious labor battle. After 18 months of negotiations, the Australian Workers’ Union and Electrical Trades Union started a strike that forced Shell to again suspend all operations. The strike lasted 76 days. After further maintenance, they resumed shipping LNG on September 19.
Bloomberg reports that the persistent outages at the Prelude have forced Shell to purchase LNG on the spot market to fill contracts. They are speculating that if the Prelude’s production remains suspended that Shell might have to make further spot purchases in a market that already has strong demand in peak season and as Russian gas supplies have been curtailed. Prelude has long-term supply contracts with Asian importers.