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Liquefied natural gas

Shell was a pioneer of liquefied natural gas (LNG) more than 40 years ago. Since then, LNG has become an important means of supplying gas to people and industries located too far away from natural gas resources to make it practical to transport it by pipeline. By cooling the gas to -162ºC we turn it into liquid and shrink its volume by 600 times, allowing us to ship it around the world. At its destination, the LNG is turned back into gas for our customers. Today, we are one of the largest LNG suppliers with facilities across the world. Around 30% of all LNG comes from joint ventures involving Shell.

In its first two years of production, the Sakhalin 2 LNG plant in Russia’s far east has provided around 5% a year of global LNG supplies. During both the construction and the operation of the plant, operator Sakhalin Energy (Shell interest 27.5%) has worked closely with indigenous communities including the Nivkh, the Uilta, the Evenk and the Nanai. In 2011, the launch of the second five-year Sakhalin Indigenous Minorities Development Plan continued to put in place programmes the communities themselves have chosen and developed. These programmes work to improve education and health-care facilities. They also underpin traditional culture by helping the preservation and study of languages, and supporting tribal enterprises and local communities.

The Gorgon LNG project (Shell interest 25%) at Barrow Island off Western Australia is expected to produce 15 million tonnes of LNG a year for over 40 years. It will include the development of the world’s largest carbon capture and storage project, expected to capture 3 to 4 million tonnes a year of CO2 that will be produced with the natural gas.

In Qatar, the Qatargas 4 LNG project (Shell interest 30%) started operations in early 2011, reaching full production of 7.8 million tonnes a year. Its first shipment of LNG went to India. The Qatargas 4 project opens up new markets for Qatari LNG in China and the United Arab Emirates. It produces gas from the world’s largest single gas field, the North Field, which holds more than 900 trillion cubic feet of gas.

Floating LNG

Work is under way to build a floating LNG (FLNG) facility that will combine production, processing and storage capacity without the need to build onshore plants or lay extensive pipelines on the seabed, significantly reducing environmental impact.

In 2011, we decided to move ahead with the construction of this FLNG facility to develop the Prelude gas field more than 200 km off the coast of Western Australia. It will be 488 metres long and built to withstand a Category 5 hurricane.

We are working with local organisations in the nearest onshore communities of the Kimberley region to help provide educational opportunities for children. We are also helping to record and preserve the traditional knowledge of the indigenous people, such as the Ngurrara.

The Prelude project will contribute to the Australian economy through opportunities for local businesses. It will create around 350 jobs and provide billions of dollars in taxes and revenue. When the Prelude field reaches the end of its life after around 25 years, the floating facility can be moved to another location to develop new gas resources.

LNG in transport

LNG has been used as a fuel in LNG ships for many years. From 2012, Shell is making LNG available as a transport fuel for specially adapted trucks using a busy route that runs from northern Alberta, Canada, to Vancouver. This will replace the diesel the trucks previously used.

In 2013, we plan to start production at what will be Shell’s first small-scale LNG facility at our existing natural gas plant, Jumping Pound, near the route’s halfway point. Until this LNG is available, other suppliers will deliver the fuel to our truck stops along the route.

Shell is also investigating opportunities to substitute LNG for diesel and propane in other industrial sectors such as marine, rail and mining.

Gas to liquids

In Qatar, our Pearl GTL (gas-to-liquids) plant started production of cleaner-burning synthetic oil products in 2011. Around 52,000 workers from around 60 countries built the plant. The project as a whole broke industry safety records during its onshore construction, achieving 77 million hours without an injury leading to time off work. One contractor company managed to achieve more than 87 million hours (see opinion, below).


Talal Mhanna, HSE Manager of the Consolidated Contractors Group, Ras Laffan, Industrial City, Qatar (photo)

“At the Pearl GTL plant in Qatar, our contracting group worked more than 87 million hours without a lost time incident – a world record for a single sub-contractor. Leadership was key. We wanted this project to be remembered as the one where everyone went back safely to their families. No level of injury was acceptable. Those who broke Shell’s Life-Saving Rules were asked to leave. Although I left Pearl GTL in November 2011, its spirit lives on in me. In fact, it changed me. I experienced a culture of care and concern where everyone felt valued and viewed safety as personal, relevant and important.”

Talal Mhanna
HSE Manager of the Consolidated Contractors Group,
Ras Laffan Industrial City, Qatar