Rob Jager’s address at SEAOCC for Northern Territory Resources Week

On behalf of Shell, I pay my respects to your Elders past, present and emerging, as the modern-day custodians of one of the oldest, continuing cultures on the planet.

Distinguished guests, ladies and gentlemen,

What a great opportunity to be here in Darwin at SEAAOC and it’s my privilege to be able to talk to you in my capacity as Shell Australia’s Vice President in charge of our newest asset, Prelude.

Today, I’d like to take you inside its engineering, celebrate the people who make it happen and share some of the things we have learned so far about operating Prelude.

Prelude, as I’m sure many of you are aware, is a floating LNG facility, and we’re quite elated about having just started it up.

And I’d like to say up front that my aspiration for Prelude is that it becomes really, really… boring!

You may well ask why ‘boring’, which I’ll explain later, but at the moment I’d like to take you back to some of the earlier stages of what Prelude was all about.

Prelude is simple in concept yet complex in practice.

We knew of a number of offshore gas reserves in the Browse basin, but these were a long way from shore…and difficult and costly to develop in a traditional pipeline way, at least at the time that was the case.

As a result, for us, these fields were essentially regarded as ‘stranded gas’.

So, our engineers figured, if you can’t take the gas to the plant, then why not take the plant to the gas?

And they came up with this idea of an integrated upstream, liquefaction and storage facility, with an open ocean port, all sitting on a rather large floating facility, located on top of the reservoir.

To put that in perspective, Prelude is in effect an offshore platform, with an onshore gas treatment facility, an LPG as well as an LNG plant, …a 300+ bed hotel…an industrial-scale power utility…nearly 450,000m3 of storage, and offloading facilities for LPG, Condensate and LNG.

All the equipment required to achieve this really meant that Prelude was always going to be a rather large gadget. I have been told that it is the largest floating facility that has ever been built.

We had to find a builder and shipyard that not only had experience in offshore platforms but also one that was able to handle the dimensions Prelude was going to be.

Rob Jager’s address at SEAOCC for Northern Territory Resources Week

We found that expertise with the Technip Samsung Consortium, or TSC as some people will know it, and in the Samsung Heavy Industries Geoje shipyard in South Korea where both the hull and topside were constructed.

And what a monumental job it was.

At 488 metres long and 75 metres wide and 105 metres high, it is as long as the Sydney Harbour Bridge and used five times the amount of steel as was used for the Harbour Bridge construction.

So, while Prelude is undeniably colossal in size, in many ways it isn’t actually that big. 

In fact, all things considered, Prelude is really an exquisite work of miniaturisation.

On a floating facility, safety is paramount and space is at a premium and as a result the 14 modules required to clean the gas, and produce condensate, LPG and LNG needed to be engineered as compact as possible, not only in the deck area but also in the way everything is laid out and fits together.

Weight distribution for balance…module height limitations for stability…the list of critical requirements was long.

In the end, the layout of the topside equipment only takes up about a quarter of the area of an equivalent facility on land.

This all required a great deal of innovation – in particular ensuring the equipment and design is functional and safe in a marine environment.

On top of this, the design had to take into account the highly isolated location where Prelude is moored – around 475 kms from Broome and 800 kms from Darwin.

And of course, as you might realise, it is also located in what’s dubbed ‘cyclone alley’, just to keep it interesting.

As you would expect, our singular focus on safety has continued during start up and ramp up, which has been a very methodical, painstaking and careful operation.

This was a very conscious decision, one where we didn’t want to rush Prelude’s commissioning and start-up, and proceed only at the pace that ensured people were safe and the environment would not be harmed. We referred to this as “at the pace of Goal Zero”.

Of course, throughout the design and SURU phases we worked very hard to meet the extensive and rigorous requirements of the relevant Australian regulator – NOPSEMA - not an easy task nor a foregone conclusion for something as unique as Prelude.

As you know, Prelude successfully offloaded its first cargo on 11 June to an LNG carrier called the Valencia Knutsen, which not only proved the theory but also our long-held dream.

It proved that we could develop stranded gas reserves from a fully integrated floating facility in the middle of nowhere.

More importantly, it also showed we could do so safely.

We have now replicated this incredible feat 11 times, having loaded six LNG cargoes, four condensate and one LPG cargo.

But for all the pipes, pumps and tanks, none of this would have been possible without the people involved.

It’s the culmination of millions and millions of hours of effort over more than a decade, by numerous teams across the world. In fact, and it’s staggering to realise, more than 100,000 people have in one form or other been part of this journey.

And while we and our partners − INPEX, KOGAS and OPIC − have drawn on the expertise from around the world to get to the point we are at now, this would not have been possible without the contribution of our local staff, our contractors and our suppliers.

We deeply appreciate the efforts of all the people on board Prelude − the long weeks they spend at sea separated from their family and friends.

Every day they make us proud as they safely operate one of the most sophisticated and amazing pieces of kit in the world.

On that note, I would like to share with you a film we made to celebrate the human achievement that has made Prelude a reality.

How cool was that? It really is all about the people.

Right now, we have more than 300 folks offshore going through their daily routines and playing their part in the world’s energy evolution.

But make no mistake, while Prelude is an amazing piece of technology it’s certainly not a ‘set and forget’ facility.

To the contrary, we have nearly 100 long-term contracts for Prelude with various local companies in Broome, the Dampier Peninsula and Darwin.

More broadly, many of the benefits that Prelude delivers are through our contractors, who are, like us, committed to local and Indigenous employment.

As an example, we are very pleased to have just signed a five-year agreement with Flowserve and its Quick Response Centre (QRC) here Darwin, for servicing Prelude’s essential equipment such as pumps, seals and valves.

Importantly, the contract expands the skill training and employment opportunities for local and Indigenous people.

On the film you also saw some of our other contractors here in the north of Australia, such as ASCO who operate our Darwin Supply Base and ATOM who provide bulk and consumable products and personal protective equipment.

And of course, Rusca Environmental Solutions, the only independent 100-per-cent-owned Indigenous waste contractor in Australia.

For us this is another huge success story…especially as Rusca has grown and diversified its business by developing its environmental capabilities, which really has opened up a range of new skills and opportunities for its workforce.

We’ve also been fortunate to be given other opportunities to do some meaningful things within the communities in which we operate.

For instance, we are very excited to be working with the Traditional Owners of the lands and waters in and around Broome, the Yawuru people.

They told us that sustainable jobs are absolutely the most important thing for the future of their young people.

So we’ve established a new Warrmijala Murrgurlayi (wah-mur-jala moor-grew-lay) program, which aims to develop a pool of job-ready and skilled Aboriginal people for Broome employers to recruit from.

And we continue our involvement with Group Training NT, the Northern Territory Government and Charles Darwin University on the ‘Prelude to the Future’ apprenticeship program.

We are just incredibly proud of its success so far with some 63 of the 84 graduates, or three-quarters, in work, many with the contractors that support Prelude.

So, that’s where we are today – we are successfully operating Prelude, generally without too many challenges.

But let me share with you a few of the learnings that we’ve had along the way.

Of course, it would be unlikely, and it would indeed worry me, if there weren’t challenges and teething issues.

It is really important that we learn from those − not only for the success of Prelude and also for other projects around the world.

We are currently going through a detailed review of the project itself as well as the commissioning and start up process to distil and capture all important learnings.

Let me share some of those with you.

Firstly, safety.

While perhaps tempting to go faster and get some product in the tank, we firmly believe that we were right to take the time we did to proceed at a pace that allowed us to stay in control, fix things properly and bring the facilities online without any significant incidents.

Not surprisingly, staff morale is perhaps the most critical to ensure people are motivated and engaged to deliver safe, quality, effective and efficient outcomes.

Treating all people with respect − and that’s not just our own staff − and good welfare is certainly something that pays off.

It is also really important to retain as much project and engineering knowledge and experience from the design and construction stage.

We’ve been fortunate to retain quite a large number of the project folk – many of whom by the way have been with the project for 10 years.

Perhaps most importantly, it is critical to have a fully integrated organisation with the capacity, capability and agility to deal with the known issues such as the SURU, maintenance and remaining project activities but also with the inevitable unknown challenges ahead.

However, despite our focus on maximising the use of proven technology, Prelude as a ‘first of a kind’ has inevitably a fairly high degree of ‘novelty’ to deal with the unique challenges of making, storing and offloading LNG at sea.

To be prepared for this, we built a couple of simulators, which are basically full-scale, high fidelity, rigorous computer models of the production system and utilities.

We used these initially for design verification, testing the control logic and subsequently fine tuning of the control systems.

We also used it to test all the start-up and operating procedures and for the rigorous training of our operators.

We reproduced problems in the simulator, analysed the causes, and developed and tested the solutions.

Risk management needs to be extremely thorough, not just for each individual risk but arguably more importantly, the combination of risks, especially for a complex remote facility like Prelude.

To help us better understand and manage the cumulative risks we developed an inhouse tool which brings together all the relevant risks in a way that makes them more visual and easier to manage.

Not surprisingly, we also spent a lot of time in the marine aspects of Prelude and, largely as a result of extensive modelling and rehearsals, things have gone fairly well both in terms of the tow from the ship yard, and our berthing and mooring process.

In terms of contract support it is really important to have ready access to aligned, trusted, competent and supportive contractors, OEMs and suppliers.

They really need to feel part of the challenge, and feel part of the organisation so that they will provide the support you need at the time you need it.

It also pays off to do a lot of ‘what if’ scenarios and thoroughly plan and prepare accordingly in terms of procedures, tools, materials, equipment and other resources.

We certainly benefitted from that as we started up the facilities. It helped us respond in a timely yet safe and controlled manner.

So, as I mentioned, it took us time to work through things methodically and we have now safely passed the important milestone of first LNG cargo and while this is exciting and worth celebrating, Prelude’s success is not about the first cargo, but the decades ahead.

For me, I’ll come back to what I said earlier, the decades ahead are all about being uneventful and, if at all possible, boring.

I don’t mean that this as in uninteresting, humdrum, uninspiring or monotonous.

To the contrary when we get it right, it will be most exciting and hugely satisfying in its own right.

My aim is to reach a state where little or nothing happens; few if any alarms, no surprises and where things are running like clockwork and we’re effectively in autopilot.

Where the facilities are operating safely, smoothly reliably and predictably at their potential, with little or no deviations or work arounds, and we are able to routinely, proactively and efficiently deal with small issues that arise.

As in, a ‘boring’ state.

At the moment, we still have much work to go ahead with to ensure we get there,

 …… but we will know when we have succeeded in this ambition when Prelude is recognised as the most “boring” asset in the Shell global portfolio…

…when our people refer to it as safest and most desirable place to work…

…and when the rest of the industry is knocking on our door to find out how we have achieved such a best-in-class outcome, particularly for a facility as complex and unique as Prelude.

Thank you.

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