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Shell (RDS.A) Recommences Prelude Floating LNG Plant Operations

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Royal Dutch Shell PLC (RDS.A - Free Report) recently informed that it resumed production of liquefied natural gas at its Prelude floating liquefied natural gas (LNG) facility, located offshore Western Australia, after almost a year-long pause. The facility has remained offline since last February due to engineering glitches.

The consignment of LNG supply via the 148,000 cubic meters capacity-holding shipment Symphonic Breeze is affirmed by its expected arrival at Prelude on Jan 4. The LNG carrier is further set to reach Japan's Himeji port on Jan 16 after departing from Prelude on Jan 9, per vessel tracking data. Meanwhile, Gaslog Glasgow with capacity worth 174,000 cubic metersis scheduled to arrive at Prelude on Jan 21.The closure of the Prelude plant depressed Australia's LNG export volumes, which further took a hit from an extended shutdown of Train 2 at the Chevron Corporation (CVX - Free Report) - regulated Gorgon LNG site due to technical snags stemming from fractured heat exchangers.

However, the restart of the Prelude facility happens at a time when LNG prices saw a record surge owing to rise in demand after a colder-than-expected winter depleted gas inventories. This, in turn, removes the challenge of a supply glut.

The 488 meters long Prelude, which is world’s biggest floating gas-export vessel, is almost 50% bigger than the largest aircraft carrier and is constructed by Technip Samsung Consortium in South Korea. The project is a joint venture among Shell, Inpex Corporation, Korea Gas Corporation and Taiwan’s CPC Corporation with Shell being the chief operator, owning a 67.5% stake in the project.

Prelude handles production, liquefaction, storage and transfer of LNG at sea as well as processing, exporting and condensation of liquefied petroleum gas. The facility has a production capacity of 5.3 million tons per annum (mtpa) of liquids with LNG accounting for 3.6 mtpa or 68% of its total capacity. This $12.5-billion project is expected to generate cash flow from next year and boost Shell’s Integrated Gas business.

Being a significant project in Shell’s portfolio, Prelude FLNG is a path-breaking facility for the emergence of floating LNG. Notably, it is also the first and the most versatile endeavor planned by the company. The facility is expected to unearth new offshore energy sources for the company and supply LNG across the world.

About Shell

Headquartered in the Netherlands, Shell is one of the largest integrated energy companies, engaged in production, refining, distribution and marketing of oil and natural gas. The company has been an offshore pioneer in the Gulf of Mexico for more than 40 years now and achieved some remarkable technological milestones in designing, constructing and operating world-class oil and gas producing assets. 

Zacks Rank & Key Picks

Shell currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Plains Group Holdings, L.P. (PAGP - Free Report) and Altus Midstream Company (ALTM - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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