Shell’s Bruce Steenson talks global oil and gas.
Shell development Australia vice president for technical and Prelude Bruce Steenson talks about the major changes that deepwater technology is making to the international energy equation ahead of his hosting duties at the upcoming Deep Offshore Technology (DOT) International Conference and Exhibition.
How do you see the current state of oil and gas activities in Australia?
It’s an exciting time for the industry in Australia – with more development in oil and gas underway than at any time in our history. The combination of demand from Asia for liquefied natural gas, the expansion of the gas industry into new frontiers locally, and the emergence of technology such as floating LNG puts Australia front and centre of global oil and gas activity. Shell is a major contributor to this investment pipeline, with a $30 billion local investment program in place for the next five years.
Does Shell see a major increase in local deepwater activity occurring and what are some of the deepwater trends you are noticing?
Globally there has been a move towards deepwater as we continue to explore for oil and gas in more challenging locations. This is being driven by an increasing demand for energy and a move towards gas as a cleaner source of energy for the world’s growing population. Of course, this is being enabled by rapid advances in technology that bring new deepwater basins within reach.
What do you believe are the reasons for the increase in deepwater activity?
The technological advances are making it possible, but the underlying demand is driven by a global population that is heading towards nine billion by 2050, and demanding more energy to deliver a higher standard of living.
How has technology helped shape the oil and gas industry?
Technology is the great enabler of our industry. From Shell’s perspective we have been at the forefront of technology in the industry for over a century – from the first bulk fuel oil tankers at the turn of the 20th century, to the world’s first LNG plant, the first FPSO (floating production storage and off take facility) and now the world’s first floating LNG facility. The technology we have today does not just allow us to increase the production of energy needed to meet the demands of a growing global population. Critically, we can now produce energy more safely, and with less impact on our environment, than ever before.
Shell has just celebrated cutting the first steel for the Prelude FLNG facility. What are the next steps for Prelude?
We have a busy few years ahead of us with Prelude. Our next major milestone is to start drilling the development wells for the project, which will take place over 2013/14. Next year we will start construction of the topsides and begin taking delivery of more of the major pieces of equipment for the facility. And of course in the meantime we will be building up our organisational capability here in Perth and offshore to support the start up of Prelude’s operations.
How does it feel to be producing the world’s first FLNG facility?
It’s a source of great pride for us in Shell to be involved in such an exciting and revolutionary project. It’s a genuine team effort that started with our long term scenario planners, who more than a decade ago recognised the opportunity to develop FLNG as a means of commercialising gas in difficult and remote offshore locations. We have teams working in a variety of locations across the globe, and we are particularly proud to be developing the first FLNG in Western Australia, which has the opportunity to now establish itself as a leader in FLNG operations.
What long term benefits will Prelude/FLNG deliver and how will it change the future of oil and gas?
Prelude will make a major contribution to Australia and Western Australia. An ACIL Tasman study has suggested that the project will add about $45 billion to Australia’s GDP, and contribute $12 billion in additional government revenue, along with 1000 new jobs in Australia. In terms of the oil and gas industry generally, we’ve already seen significant interest in FLNG since we announced Prelude. Shell’s FLNG technology is a potential lower-cost option for many fields. Construction of FLNG facilities in one shipyard, with a dedicated, specialised workforce, has obvious cost advantages over greenfields sites in remote, high cost locations. Another advantage of our FLNG strategy of “design one build many” is that through replication and standardisation we can reduce the capital cost and construction period of FLNG facilities over time.
What are the challenges of the technology?
While the FLNG concept is new, the technology behind FLNG is largely taken from existing capabilities, for example from onshore LNG and FPSOs. So the challenge is how to package this existing knowledge and capability so that it can be applied in a floating LNG context. We have invested heavily in research and development to address these challenges – things such as understanding and managing different metocean conditions, the cyclone ratings of the facility, and how to manage the storage and loading of LNG and condensate from a floating facility.
What makes Australia a leader in floating offshore production systems?
Australia has a proud history of floating production, storage and off take facilities (FPSOs) in the oil and gas industry. This technology has been applied off the Pilbara, Gascoyne and NT coasts for many years now, so we have a degree of experience to build on as we enter the age of FLNG.
Apart from Prelude, what new deepwater technology developments are Shell working on?
Shell has a strategic focus on deepwater developments. It is a key component of our global growth strategy. We have interests in the Gulf of Mexico, West Africa and northern Europe, as well as our interests in Australia.
What are your thoughts on the DOT conference and is this the first time Shell has participated?
Western Australia is clearly one of the world’s major centres of oil and gas development, so it is a great opportunity for the state to host the global industry and showcase its expertise in the field. The conference itself brings together a highly credentialed list of experts in deep water technology, and the exchange of technical ideas, and in the critical area of safety, will make a great contribution to industry standards and performance. The annual DOT conference has made a significant contribution to the industry since its inception 35 years ago. Shell is pleased to be a continuing and major supporter of this event.
What’s next for Shell?
Shell Australia has plans to invest around $30 billion in Australian resource developments over the next five years. We are in a major expansion phase in Australia and this will see a lot of changes and growth in our local organisation. Our key milestones in the short to medium term are to successfully complete the Prelude project and have the facility onsite and producing, and further define and develop our other onshore and offshore LNG projects, such as Gorgon, Wheatstone, Browse, Sunrise and Arrow. We also have a significant exploration portfolio that will unfold over the coming years, so we hope this leads to further opportunities for us in Australia over the coming decades.
DOT 2012 will be held at the Perth Convention Exhibition Centre from 27-29 November.
Pic: Bruce Steenson
Pic: Shell, Technip and Samsung Heavy Industries celebrate the first steel cut for the game-changing Prelude floating liquefied natural gas project’s substructure.
Pic: Prelude floating liquefied natural gas facility, off the coast of Western Australia.
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