Shell’s troubled Prelude floating liquefied natural gas development off the coast of Western Australia could be offline for sometime following several general directions issued by Australia’s offshore safety regulator.

Output at Prelude was halted earlier this month after a reported electrical fire on 2 December in an enclosure housing batteries for backup power resulted in a complete loss of power at the facility.

In the several days that followed, Shell was only able to restore “unreliable and intermittent power availability”, impacting the habitation and working conditions of the personnel on the facility.

Essential services such as lighting, safety systems, communication systems, potable water systems and sewage treatment were all impacted, as was Prelude’s heating, ventilation, and air conditioning system — resulting in seven people requiring treatment for “heat-related conditions”.

Nopsema investigation

Offshore regulator the National Offshore Petroleum Safety & Environmental Management Authority (Nopsema) said it commenced an investigation into the incident on 3 December.

It also revealed that Shell’s failure to restore reliable power by 6 December was seen to “represent an ongoing impact and risk to the health and safety” of personnel on the facility and the regulator mobilised inspectors to the facility, which carried out an investigation from 8 to 10 December.

In the general direction issued by Nopsema on 23 December, the regulator stated the inspectors concluded Shell did not “have a sufficient understanding of the risks of the power system on the facility, including failure mechanisms, interdependencies and recovery”.

The inspectors also found that the power failure had directly impacted the emergency response capability of the facility, the operation of safety critical equipment, as well as the evacuation of personnel by helicopter or boat.

They also found the functionality of process equipment required to effectively manage the LNG inventory had been directly impacted by the power outages.

While Shell is carrying out its own inquiry into the incident, Nopsema found the operator’s planned investigation did not provide for a thorough review of the evidence and root cause analysis of the entire series of events experienced during the incident on 2 December.

The regulator also found Shell’s investigation would not include a review of the risks for future similar incidents and the actions that could be taken to mitigate them.

General directions

As a result of its own investigation, Nopsema has issued Shell with four directions, including the requirement for the Anglo-Dutch supermajor to carry out a review of the incidents and associated consequences that occurred on Prelude from 2 to 6 December.

Nopsema has also ordered Shell to develop a detailed plan, schedule and commitment to timely implement all necessary corrective actions found to be required as a result of the review.

Before Shell is able to resume production from Prelude, it will need to demonstrate to Nopsema the facility can safely recover essential power and associated essential services following a loss of power, and that the safety systems and essential support systems operate to maintain safety of personnel.

Shell will be required to provide Nopsema with an update on the first business day of each month, starting in March, detailing the progress it is making to satisfy the first two directions issued by Nopsema.

Upstream has contacted Shell for a response to the general directions issued by Nopsema and when it anticipates to resume output at Prelude.

Troubled history for Shell's flagship FLNG vessel

Shell has experienced a turbulent time with its flagship FLNG project offshore Australia since the unit’s arrival on location from Samsung Heavy Industries’ Geoje Island yard in South Korea in July 2017.

Production start-up was not achieved until late 2018 and the first cargo did not ship until June the following year.

It failed to reach its 3.6 million tonne per annum nameplate capacity before an electrical fault saw the facility taken offline in February 2020, with production not restored until January the following year.

The latest shutdown comes after the facility experienced its best ever performance in the third quarter of 2021, with data from consultancy EnergyQuest estimating the facility had shipped 827,000 tonnes of LNG (11 cargoes) in the quarter, representing 91% of its 3.6 million tpa nameplate capacity.

The 488-metre-long Prelude FLNG vessel was built to exploit the giant liquids-rich Prelude and Concerto fields, located 475 kilometres north-northeast of Broome.

Along with 3.6 million tpa of LNG, the facility has the capacity to process 1.3 million tpa of condensate and 400,000 tpa of liquid petroleum gas.

Partners in Prelude are operator Shell with 67.5%, Inpex holding 17.5%, Kogas with 10% and CPC holding 5%.

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