Shell risks losing gas race as rival targets shared resource

Bloomberg

After a decade planning the world’s largest floating gas export plant, Royal Dutch Shell Plc’s supplies could get tapped by a competitor first. Shell and Japan’s Inpex Corp. are both targeting gas from a connected reservoir in Australia’s remote Browse Basin, about 200 kilometers (125 miles) off its northwest coast, according to consultant Wood Mackenzie Ltd.
Meeting its planned start up date this month would give Inpex’s Ichthys LNG project an edge over Shell’s Prelude LNG.
“The difference between Prelude starting six months before versus six months after Ichthys could be a few percent of their reservoir stake,” Wood Mackenzie analyst Saul Kavonic said in an email. “That is a material amount.”
The two projects, both due to start this year at a combined cost of about $50 billion, are being watched by energy majors intrigued by their different approaches to tapping remote fields. The 3.6 million-ton-a-year Prelude represents Shell’s biggest bet on floating LNG technology, which liquefies the fuel at sea before its loaded on tankers and shipped to buyers, eliminating the need for subsea pipelines to shore.
For Inpex, the Ichthys development is its most ambitious project and its costliest. With an annual capacity more than double Prelude’s, at 8.9 million tons, it plans to pipe gas 890 kilometers to an onshore plant near Darwin where it will be liquefied and exported.
While the two projects draw from separate fields, Prelude and Ichthys respectively, they may share gas at a reservoir called Brewster, according to a 2015 report by the
Australian government-operated Geoscience Australia. As well, the National Offshore Petroleum Titles Administrator said the two fields may extend beyond the boundaries defined by their original exploration blocks, which are adjacent.
While Shell and Inpex are running separate projects, they aren’t strictly rivals.