Sunday 20, May

Sea giants do battle

Off the coast of Western Australia, a battle between mega giants is unfolding. The combatants involve the world's biggest semi-submersible platform, the longest sub-sea pipeline in the southern hemisphere, and the largest floating facility ever built.

The pressure to start drawing gas first is obviously intense.

The race for Browse Basin gas has even ignited competition on an international scale. Australia may overtake Qatar to become the world's top exporter of liquefied natural gas (LNG) once Ichthys and Prelude production is in full swing.

But will any future vessel match or even exceed the scale of Prelude?

Mr Kavonic says the fossil fuel industry isn't likely to try to build one any time soon.

"We need new projects to meet demand [for gas] in the early 2020s," he explains. "We needed projects to be sanctioned last year and that didn't happen, we only saw one."

That single project will be built by Italy's oil and gas giant Eni. A floating facility off the coast of Mozambique, it will have a slightly smaller capacity than Prelude - 3.4 million tonnes of LNG per year versus Prelude's 3.6 million. The capacity of Ichthys will be much bigger, at 8.9 million tonnes.

"There's so far no [other] similar projects under the radar," says Jean-Baptiste Dubreuil from the International Energy Agency.

The only other comparable vessel might be Allseas' Amazing Grace - an enormous twin-hulled construction ship due to be built over the coming years. Its job will be to lift offshore platforms, however, not process gas.

Without more projects for gas production, industry watchers worry that, in about five years' time, demand for natural gas could outstrip supply.

There is the "spectre of an LNG supply shock in the early 2020s" looming, says Stuart Elliott, gas editor at data provider S&P Global Platts.

The problem could be particularly pronounced in Asia - especially China.

"Last year, Chinese production increased by 8%, but they're not able to keep up with the growth of demand," says Mr Dubreuil. "We expect their needs for imports will grow over time."

In fact, the IEA thinks that China will be importing 43% of its natural gas by 2040. This supply will need to be reliable if the country wants to avoid the gas shortages it experienced last winter - caused, ironically, by a botched attempt to cut coal use.

In the meantime, there is some hope that the unexpectedly speedy growth of renewables - particularly solar and wind - will help to plug the gap.

But there's little doubt that over the next few decades many countries, including the UK, will be heavily reliant on gas for their energy needs.

Prelude and Ichthys are due to come online soon, but neither Shell nor Inpex will commit publicly to a start date.

And with wholesale natural gas prices currently half what they were in early 2014, such multi-billion dollar projects may never recoup their outlay.

As climate change climbs to the top of the world's agenda, funding such huge fossil-fuel extraction projects - impressive feats of engineering as they are - will look increasingly risky.

Both Shell and Inpex must be hoping that their sea-faring mega giants don't go the way of the dinosaurs.

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