Lloyd’s covers largest ever floating vessel

Energy, LNG, Marine Insurance, Story of the Day — By on January 9, 2014 at 8:26 PM
The Prelude

The Prelude

Thursday 09 January 2014 – From the procurement of the steel to pumping the first gas, Lloyd’s is leading the insurance of Shell’s pioneering liquefied natural gas (LNG) facility, Prelude. (source: Lloyd’s of London)

The hull of Prelude, Shell’s new LNG facility and the biggest vessel ever built, was carefully floated out of the dry dock at Samsung Heavy Industries’ shipyard in Geoje, South Korea, at the end of last month. The 488-metre-long hull is longer than the Empire State Building is tall and its LNG storage tanks have a capacity equivalent to 175 Olympic swimming pools.

When it is finished Prelude will weigh more than 600, 000 tonnes fully loaded, displacing the same amount of water as six of the world’s largest aircraft carriers put together.

Yet while the Prelude facility is big, it is also small taking up one quarter the area of an equivalent onshore LNG plant. In what will be the first deployment of Shell’s floating liquefied natural gas (FLNG) technology, Prelude will be towed to a remote basin around 475 kilometres north-east of Broome, Western Australia where it will operate for around 25 years. The facility will remain onsite during all weather having been designed to withstand a category 5 storm and is expected to produce around 3.6 million tonnes of LNG per annum to meet growing demand.

In safe hands

Lloyd’s is leading the insurance of the Prelude project, from the procurement of the steel and the fabrication through to the hook-up and pumping the first gas. Dominick Hoare, joint active underwriter with Lloyd’s Watkins syndicate said that although the technology is well established onshore, it is a new concept for the offshore energy sector. “The intriguing aspect from an insurance perspective was this application of existing technology on a new frontier, ” he told lloyds.com. “But Shell is an industry expert in this field and working closely with its engineers reassured underwriters that the project is in safe hands.”

Existing technology that Shell has adapted for Prelude includes mooring systems to deal with the forces associated with securing the largest floating facility ever built, as well as LNG tanks that can handle ‘sloshing’ – the motions of the liquid LNG within the hull if and when there are stormy seas.

“Making FLNG a reality is no simple feat, ” said Matthias Bichsel, Shell projects & technology director. “A project of this complexity – both in size and ingenuity – harnesses the best of engineering, design, manufacturing and supply chain expertise from around the world. Getting to this stage of construction, given that we only cut the first steel a year ago, is down to the expert team we have ensuring that the project’s critical dimensions of safety, quality, cost and schedule are delivered.”

Chilling gas to -162° Celsius (-260°F) turns it into liquid and shrinks its volume by 600 times, allowing it to be shipped to far-off towns and cities where the energy is needed. Moving the production and processing out to sea where the gas is found is a big step forward because it avoids the potential environmental impact of constructing and operating a plant on land, including laying pipelines to shore and building other infrastructure.

The contract was a challenge for underwriters from a technical and capacity point of view, Hoare said, particularly as it includes insuring Prelude “in transit” to Western Australia. “For example the tow is very big and has to be carried out to avoid two windstorm seasons on its route, ” Hoare explained. “But this is what Lloyd’s does best: it saw opportunity in a new challenge and has quickly become the leader in what will be a growing market.”

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