Natural Gas Production: Will Australia Overtake Qatar?

Energy providers Shell and INPEX have been in a head-to-head race for many years now. Both have developed billion-dollar natural gas production facilities that will enter into operation at about the same time. But, a winner is emerging: Australia.

At 75 meters wide and nearly 500 meters long, Prelude FLNG is the world’s largest offshore floating facility. Commissioned by energy company Royal Dutch Shell, the FLNG (floating liquefied natural gas) platform is set to begin operations off the coast of Australia and is expected to produce 3.6 million metric tons of natural gas per year. Shell cools the extracted natural gas to minus 162 degrees Celsius to liquefy the gas, reducing its volume and making it easier to transport. Pumps will draw 50 million liters of water from the ocean every hour to keep the natural gas cool. This is the first natural gas production technology of its kind.

Shell’s competitor INPEX, Japan’s largest oil and gas producer, has several platforms in the Ichthys field in the Browse Basin, Australia. The Ichthys field lies approximately 220 kilometers off the coast of Western Australia and is the largest discovery of hydrocarbon to be found in Australia for 40 years. The field is estimated to contain over 12 trillion cubic feet of gas.

A special feature of the Ichthys project is that natural gas extracted by underwater drilling is processed at a large floating central processing facility. There, condensates and water are extracted and impurities immediately removed. The processed gas can then be sent via an 890-kilometer pipeline to Darwin, where the natural gas is then cooled and liquefied. In addition to its processing plant, INPEX also owns huge floating production, storage and offloading facilities. This year, INPEX’s flagship facility will enter into operation; the 340-meter-long Ichthys Explorer equipped with comprehensive HIMA safety technology. The total cost of the project amounts to around 24 billion US dollars.

Who Will Win the Clash of the Titans?

Shell and INPEX will both have billion-dollar large-scale facilities in operation this year. More importantly, they will be able to satisfy growing energy demand in China, which will be closing more and more coal-fired power plants due to environmental considerations. Global energy consumption continues to increase to the point where demands can barely be met without new sources of natural gas. Both energy companies want to close these gaps and gain as much market share as possible.

Prelude may be the bigger facility, but INPEX could well achieve the edge over Shell in the end. Despite Shell’s innovative method of offshore cooling, experts predict that INPEX’s intricate infrastructure will be less error-prone and therefore more secure against failures. Shell’s logistical advantage might not be as significant as expected.

INPEX is also in the lead in terms of production capacity. According to predictions, INPEX’s project will be able to produce around 8.9 million metric tons of LNG per year – Shell around 3.6 million metric tons. This sounds like a huge difference, but annual production is not the only deciding factor. Since both acquire gas from the same region, it will the faster of the two than wins. Shell, however, experienced a setback two years ago. During construction, a fire destroyed various parts of the Prelude FLNG facility, delaying operations. Both projects are close to completion, but it is not yet clear which one will begin production first.

Australia Is Overtaking Qatar

One thing is for sure, with natural gas production beginning in the Browse Basin, Australia could well become the largest natural gas producer in the world by the end of the decade. It could even surpass current leader Qatar, which has a 30 percent share of the global market for liquid natural gas. In any case, the winner will soon become clear.