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Shell (SHEL) Resumes FLNG Operations Amid Gas Demand Surge
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Shell plc (SHEL - Free Report) reportedly resumed operations at its Prelude floating liquefied natural gas (FLNG) production platform offshore Australia. Following an extensive maintenance period, the platform is expected to see its first cargo within days, according to industry sources cited by Reuters. The timing coincides with peak winter demand in the northern hemisphere, allowing Shell to potentially capitalize on increased natural gas demand in North Asia.
Background
The Prelude FLNG, known as the world's largest of its kind, has encountered its fair share of challenges since its inaugural LNG cargo shipment in June 2019. Despite these setbacks, Shell has demonstrated its resilience and adaptability, ensuring the platform's return to service aligns with the surge in winter natural gas demand.
Maintenance Strategy
Contrary to the initial plans for a year-long overhaul, Shell strategically opted for a shorter maintenance period, a decision based on the desire to exploit robust gas demand. In September, industry sources revealed that Prelude's maintenance period would be shortened, enabling it to meet the winter gas demand in North Asia.
Production Halts and Setbacks
In May 2023, Shell temporarily halted production at Prelude LNG due to an operational trip. The challenges persisted, with production and exports disrupted between July and September of 2022 due to industrial action prompted by trade unions seeking higher wages.
Fire-Related Shutdown
Following the resolution of the labor dispute, Prelude faced another setback at the end of 2022 when a fire erupted on Dec 21. Although the fire was swiftly contained with no injuries reported, the facility underwent a temporary shutdown. Production at Prelude LNG resumed approximately a month later.
Winter Demand Dynamics
The resurgence of Prelude's operations coincides with a critical moment in the energy landscape. The tepid natural gas demand observed in both Asia and Europe earlier in the heating season, attributed to high inventory levels and milder weather, is expected to shift. The platform's timely return positions Shell to leverage the anticipated surge in winter gas demand in North Asia.
Conclusion
Shell's decisive actions in restarting operations at the Prelude FLNG underscore its commitment to navigating challenges and capitalizing on market opportunities. As the global energy landscape evolves, the significance of flexible and responsive strategies cannot be overstated. The successful resurgence of Prelude not only contributes to meeting the heightened winter gas demand but also highlights Shell's ability to adapt to a dynamic industry.
The Williams Companies is valued at $42.12 billion. The company currently pays a dividend of $1.79 per share, or 5.17%, on an annual basis.
WMB, the U.S.-based energy infrastructure company, operates through Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services segments.
MUSA is worth $7.53 billion. In the past year, its shares have risen 26.1%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise. It operates retail gasoline stores, principally in the Southeast, Southwest and Midwest United States.
Liberty Energy is valued at $3.1 billion. LBRT currently pays a dividend of 28 cents per share, or 1.52%, on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to the North American onshore exploration and production companies.
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Shell (SHEL) Resumes FLNG Operations Amid Gas Demand Surge
Shell plc (SHEL - Free Report) reportedly resumed operations at its Prelude floating liquefied natural gas (FLNG) production platform offshore Australia. Following an extensive maintenance period, the platform is expected to see its first cargo within days, according to industry sources cited by Reuters. The timing coincides with peak winter demand in the northern hemisphere, allowing Shell to potentially capitalize on increased natural gas demand in North Asia.
Background
The Prelude FLNG, known as the world's largest of its kind, has encountered its fair share of challenges since its inaugural LNG cargo shipment in June 2019. Despite these setbacks, Shell has demonstrated its resilience and adaptability, ensuring the platform's return to service aligns with the surge in winter natural gas demand.
Maintenance Strategy
Contrary to the initial plans for a year-long overhaul, Shell strategically opted for a shorter maintenance period, a decision based on the desire to exploit robust gas demand. In September, industry sources revealed that Prelude's maintenance period would be shortened, enabling it to meet the winter gas demand in North Asia.
Production Halts and Setbacks
In May 2023, Shell temporarily halted production at Prelude LNG due to an operational trip. The challenges persisted, with production and exports disrupted between July and September of 2022 due to industrial action prompted by trade unions seeking higher wages.
Fire-Related Shutdown
Following the resolution of the labor dispute, Prelude faced another setback at the end of 2022 when a fire erupted on Dec 21. Although the fire was swiftly contained with no injuries reported, the facility underwent a temporary shutdown. Production at Prelude LNG resumed approximately a month later.
Winter Demand Dynamics
The resurgence of Prelude's operations coincides with a critical moment in the energy landscape. The tepid natural gas demand observed in both Asia and Europe earlier in the heating season, attributed to high inventory levels and milder weather, is expected to shift. The platform's timely return positions Shell to leverage the anticipated surge in winter gas demand in North Asia.
Conclusion
Shell's decisive actions in restarting operations at the Prelude FLNG underscore its commitment to navigating challenges and capitalizing on market opportunities. As the global energy landscape evolves, the significance of flexible and responsive strategies cannot be overstated. The successful resurgence of Prelude not only contributes to meeting the heightened winter gas demand but also highlights Shell's ability to adapt to a dynamic industry.
Zacks Rank and Key Picks
Currently, SHEL carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like The Williams Companies (WMB - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Murphy USA Inc. (MUSA - Free Report) and Liberty Energy Inc. (LBRT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Williams Companies is valued at $42.12 billion. The company currently pays a dividend of $1.79 per share, or 5.17%, on an annual basis.
WMB, the U.S.-based energy infrastructure company, operates through Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services segments.
MUSA is worth $7.53 billion. In the past year, its shares have risen 26.1%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise. It operates retail gasoline stores, principally in the Southeast, Southwest and Midwest United States.
Liberty Energy is valued at $3.1 billion. LBRT currently pays a dividend of 28 cents per share, or 1.52%, on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to the North American onshore exploration and production companies.