AUSTRALIA 

Brisbane Times

Shell’s Prelude gas vessel faced ‘catastrophic failure’ from power outage

 By Peter Milne: January 5, 2022 

Power problems on Shell’s giant Prelude gas vessel in December with almost 300 workers on board risked the “catastrophic failure” of parts of the ship’s structure, according to a report by the offshore safety regulator.

While the crew off the WA coast battled in tropical heat without air conditioning or ventilation to restore power, the steel spine of the vessel was cooling towards a point where it could have lost the strength to support the 80,000 tonnes of gas processing equipment on top of the 488 metre-long vessel.

A National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) investigation report obtained by this masthead reveals a long list of safety concerns.

The regulator on December 23 ordered Shell not to recommence production until it demonstrated it could keep the Prelude safe if another power failure occurred.

Shell’s $24 billion floating liquified natural gas factory has suffered a series of safety and production problems since mid-2017, when it arrived at its moorings 475 kilometres from Broome from a South Korean shipyard.

The world’s largest vessel was to be the first of many deployed by the Anglo-Dutch oil and gas giant but has been in production for less than 12 months in 4½ years.

The most recent problems started on the evening of December 2, 2021, when a small fire triggered an emergency shutdown that depressurised the Prelude’s complex plant by sending vast quantities of gas to a flare tower to be burnt.

With no gas to generate power, the Prelude relied on three diesel backup units that all failed to work properly. The fire was quickly extinguished but for the next 2½ days Prelude’s multitude of complex systems to keep the vessel and its 293 crew safe only operated sporadically due to a lack of reliable power.

Crew reported temperatures as high as 45 degrees in their living quarters with humidity making it difficult to walk on the wet floors. Some crew worked 30-hour shifts to fix a cascade of technical problems.

Four of seven crew treated for heat exhaustion required intravenous drips. All have now recovered.

While the crew were troubled by heat below decks, steel that loses strength in low temperatures was getting colder and colder.

Steel structures supporting the deck sit in a water-filled cavity along the centre of the Prelude between vast 35 metre-wide insulated tanks that store LNG at minus 162 degrees. Without power there was no heating of the cavity to prevent the temperature of the steel falling to dangerously low levels.

NOPSEMA inspectors concluded the unreliable power produced “significantly higher than normal” risks on the Prelude, including “cooling of the substructure in the vicinity of the LNG tanks could lead to catastrophic failure if unmitigated”.

NOPSEMA found Shell “appropriately managed” the immediate risks to crew and when its inspectors visited a week later that the incident was under control. However, the regulator’s report listed numerous failures that made it harder for the crew to make the vessel safe.

Without power, key information was unavailable and the crew had to rely on memory. Some procedures to restart equipment were inadequate but by luck experts from suppliers happened to be onboard to assist. The emergency response team only had limited communication as radio equipment did not work properly.

A repeat of the December total power outage was “foreseeable and credible”, according to NOPSEMA, and there was potential for another emergency shutdown to exceed design limits of the flare system that handles the escaping gas.

The report found Shell had not yet determined the root causes of the initial fire or the subsequent power and equipment failures.

A NOPSEMA spokeswoman said the regulator was not considering a prosecution of Shell at this stage.

“An enforcement action has been issued which requires Shell to satisfy us that the facility is safe before production can recommence,” she said.

A Shell spokeswoman said the company had temporarily suspended production and was investigating the root cause of the incident. “We will continue to work methodically through the stages in the process to prepare for hydrocarbon restart with safety and stability foremost in mind,” she said.

To date the Prelude has not been a successful investment for Shell and its joint venture partners.

Shell never released Prelude’s cost, but it is understood to have risen from about $US12 billion to about $US17 billion.

Prelude was one of the main reasons Shell slashed more than $11 billion from the value of its global LNG business in mid-2020. Japan’s Inpex reduced the value of its 37 per cent stake in Prelude by a third, or $1.7 billion.

Shell’s global accounts released in early 2021 revealed it expects to never pay Australia’s Petroleum Resources Rent Tax for the gas extracted by the Prelude. The PRRT is based on profit that the Prelude is unlikely to achieve due to cost overruns, delays to start up and unreliable production.

Peter Milne covers business for WAtoday, The Age and The Sydney Morning Herald with a focus on WA energy, mining, construction and property.Connect via Twitter or email.