Two and a half years ago, I wrote about Royal Dutch Shell (RDS-A) creating a giant LNG platform that was five times the size of an aircraft carrier.
It seemed like science fiction…
Now it’s closer than ever to becoming reality.
The idea was to build a floating liquid natural gas plant (FLNG) called the Prelude FLNG Project, a massive vessel with the goal of reaping offshore natural gas fields.
It is being constructed today in South Korea and will launch in 2017.
The Prelude facility will process up to 110,000 barrels of oil equivalent per day and supercool natural gas to -162°C, reducing its volume by 600 times so it can be shipped to customers around the world.
The FLNG plant is an all-in-one floating LNG processer. It will extract gas, process it, and liquefy it directly above the gas reserves, then load it on tankers for shipping. This means you don’t have to worry about pipelines or transporting gas to traditional onshore processing.
The plant is expected to have an annual production capacity of 3.5 million to 4 million tons of LNG.
The plant will come complete with a host of electronics and tools, such as underwater robots and seismic technology to locate new fields and provide real-time geographic information.
Size of Six USS George Washingtons
This LNG vessel will be the largest floating thing ever built.
It will displace 600,000 metric tons of water. It will be 1,500 meters long and will contain 260,000 metric tons of steel.
The company is building this leviathan at a cost of $12 billion to suck natural gas out of the Prelude field between Australia and East Timor for the next 25 years.
It is the solution to the question vexing Big Oil for years — that is, how to procure big underwater deposits of NG when there is no pipeline or other infrastructure…
And it has the added bonus of downplaying local politics.
Already Started Drilling…
In preparation for this launch, Royal Dutch Shell has started drilling seven development wells 475 kilometers Northeast of Broome, Australia.
Shell has described floating LNG as a “game-changer” in the industry. And though RDS is the first mover, others are jumping on the bandwagon…
Exxon Mobil (NYSE: XOM) and BHP Billiton (AMEX: BPH) are going to trump them by building an even larger FLNG for drilling off the northwestern shore of Australia. This vessel will be operational in 2020-2021 and is planned to be 0.3 miles long. That’s five football fields in length.
The XOM FLNG would double Shell’s proposed FLNG in terms of production. Furthermore, the plant would increase Australia’s current LNG production by nearly 30% a year — enough to supply all of Japan’s LNG needs for a month.
These platforms have the added bonus of being able to be moved once the NG wells run dry.
The vessels are being built by Samsung Heavy Industries (KSE: 010145.KS), which has one of the few dry docks in the world that is big enough.
Cheap Energy
This, of course, pushes forward my dominant investment theory — that natural gas or liquefied natural gas will remain cheap and grow in use over the next decade.
Big Oil doesn’t invest $12+ billion without a great deal of study…
In my Crisis and Opportunity newsletter, I’ve been recommending companies that will benefit from building infrastructure for LNG, or that make money from inexpensive NG/LNG.
One company is up 67.43% and has been increasing its backlog almost every week.
Another company is building a refinery in Louisiana to turn abundant natural gas into jet fuel.
Natural gas is the future. Climb aboard.
Good hunting,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
