Shell talk up benefits of FLNG

Shell say their Prelude floating LNG project is recruiting on an Australian-first principal, and expect to employ around 1000 people.

The $12 billion Prelude project off the West Australian coast will be the largest floating structure ever built and is expected to produce 3.6 million tonnes per annum of LNG, as well as volumes of condensate and liquefied petroleum gas.

While construction of the Prelude vessel is taking place overseas, Shell executives told the Western Australian Economics and Industry Standing Committee that the operating phase will see the project develop to support local jobs and industry.

The state parliamentary inquiry heard from gas companies, unions, and local institutes about the economic implications of FLNG in June, with background briefings being made public this week.

Shell’s commercial manager East Browse Ian Grose said there would be about 350 people working on Prelude by 2017 and 650 indirect jobs.

About 60 Australians were already working in the operations section, he said.

Shell Australia general manager Steven Phimister said the company was committed to hiring locals.

“We are recruiting on an Australian-first principal,” he said.

Shell said they are working closely with local institutions, government and industry to train and develop workers so they can become fully experienced and capable operating staff.

The gas giant has been working closely with Curtain University and the Challenger Institute to develop a FLNG training consortium.

“We see this as very important because of the hot labour market,” Grose said.

“We cannot be expecting all the experienced staff we need, so we need to have the capability to train them and address any competency gaps that could be there.”

Shell also told the inquiry the Australian economy would gain $200 million a year if about 70 per cent of operational contracts were awarded locally.

Grose said 200 contracts would be put in place by 2017.

"We are expecting that will produce around $200 million of benefit to the local community if we get about 70 per cent local content."

Grose said that drilling and sub-sea installation would see local content at 37 per cent and 20 per cent, respectively.

Phimister said the drive in developing FLNG technology in Australia was being driven by demand in traditional Asian markets where customers were looking for supply diversification.

"The floating LNG technology itself is a response, alongside other responses, to keep Australian energy competitive in the face of an increasingly competitive and difficult market in the region,” he said.

Phimister said with increased competition from gas suppliers overseas, cost competitiveness was ‘critical’.

Australian Steel Institute state manager James England told the committee that a move to FLNG would create no steel-based local content benefit.

"In terms of design engineering with steel fabrication, all this work will go to offshore companies," he said.

“With the changes to FLNG, WA will not see any steel-based local content benefit.

“There is nothing compelling them (Shell) to use Western Australian services.”

Australian Manufacturing Workers Union State secretary Steve McCartney said developing FLNG technology in Australia was critical to protecting industry.

"If we are not in the design phase and the engineering phase we do not get to that point where we break into that market," McCartney told the committee.

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