Shell CEO says innovation and investment are key for the LNG industry’s development

The CEO of Royal Dutch Shell, Ben van Beurden, has spoken at the LNG 18 conference in Perth, Australia. Van Beurden claims that the LNG industry needs to continue to invest in order to that ensure that there is sufficient supply for long-term energy requirements. Van Beurden continues by saying that LNG production costs need to be reduced so that it can compete with other energy sources.

Van Beurden said: “Costs also need to come down to make gas competitive with other sources of energy, such as coal and renewables. So our industry needs to continue to innovate to drive down capital costs across the LNG value chain – from upstream development to liquefaction, shipping and regasification.”

Van Beurden went on to say that the construction of LNG plants has become more expensive because of the time taken to engineer them, and the fact that they are often built in complex locations and face lower productivity when built.

“We need to reverse this trend […] Standardisation of design, engineering and construction is one key factor. Another is working more effectively and efficiently in the supply chain. Shell is playing its part in these areas. A case in point is Shell’s floating LNG project Prelude ? right here in Australia.

“Floating LNG will be used to help open up remote gas fields; fields that in the past would have been considered too costly or difficult to develop. Prelude, as a pioneering project, is well into its construction phase and we’ve taken the learnings from this.

“There now is a standardised design. Depending on the composition and location of gas reservoirs, we can add different predesigned topside modules and offloading systems. And, working with our strategic suppliers, the project also led to spin-offs.

“Let me give you an example. Prelude is designed to export LNG, LPG and condensate from resource-rich gas fields. But there are also a lot of so-called lean gas fields which do not produce as much LPG and condensate. To produce more LNG instead, we’ve made some changes to the Prelude design and developed ‘FLNG Lean’. We expect FLNG Lean to be cost-competitive for larger, lean gas fields.”

Van Beurden concluded his speech by looking at the benefits of natural gas and LNG, and reiterating the importance of innovation in the industry. He said: “So energy is at the heart of innovation. But innovation is also at the heart of energy and its future. In its fight against climate change, the world seeks to move towards an energy system with fewer CO₂ emissions.

“Innovative thinking will be crucial in this. It’s about developing cleaner fuels for transport; about inventing new ways to store electricity produced by renewables; about capturing CO₂ and storing it safely underground in an economically viable way ? to name just three examples.

“Yet, however important, finding long-term solutions through innovation isn’t the only thing we need to be thinking about. In the battle against climate change, existing, proven, shorter-term solutions matter too. The use of more natural gas is one of these solutions.

“Gas is a lower-carbon, cleaner-burning partner to renewables. When burnt for power, LNG produces around 40% less CO₂ than coal ? even after the process of liquefying, transporting and turning it back into gas. Gas is also flexible, abundant and diverse.

“I know, ladies and gentlemen, that these are tough times for our industry. But low prices have one major benefit: they make gas a more attractive choice for consumers. So now is the time to make sure that gas gets the place in the energy mix it deserves.

“Australia is already one of the leading countries of the LNG industry. I hope that you’ll continue to lead the way in making natural gas a natural choice across the globe. Thank you.”

Edited from press release by David Rowlands

Read the article online at: https://www.lngindustry.com/liquefaction/14042016/shell-ceo-says-innovation-and-investment-are-key-for-the-lng-industrys-development-2287/