Investors beware: after spending more than $40 million in the Canning Basin, the US-owned company's continued pursuit of remote gas appears to be throwing good money after bad.
Canadian firm Vermilion judged the chance of the December spill as "rare" - the same probability it claims for seven planned exploration wells that could affect anywhere along the Pilbara coast.
Anglo-Dutch Shell operates the Prelude floating LNG facility off the Kimberley coast and owns 25% of the Gorgon LNG project and a slice of the North West Shelf.
LON: SHEL
Plentiful and cheap gas to WA may be undermined by pressure from North West Shelf LNG participants and Perth Basin producers for the McGowan Government to weaken its ban on the export of onshore gas.
Shell, Exxon and Chevron are big players in Australian oil and gas and being forced to decarbonise sooner will affect their local operations, with a possible king hit to Prelude.
Shell's production of millions of tonnes of carbon emissions by burning excess gas at Prelude LNG 400km off the WA coast will no longer go unnoticed, with satellites now tracking flaring across the globe.
Shell's accountants predict the Dutch giant will never pay Australia for gas consumed at the Gorgon and Prelude LNG projects that it can sell for up to about $4 billion a year.
Shell's Prelude floating LNG has stumbled on the road back to production after a failed seal caused subsea wells to be shut-in days after they were opened.
The wells are open and safety inspectors arriving as Shell looks to recommence LNG production from its problematic Prelude floating LNG vessel off the WA coast.
Inpex thinks the value of Prelude floating LNG has dropped 37% this year, joining the queue of companies seeing much less value in Australia's LNG future.
Shell has followed BP in thinking its oil and gas assets are now worth much less in a post-COVID more climate-aware world and Prelude LNG is a big contributor to the value destruction.
Shell's giant $US17B Prelude floating LNG is late, expensive, dirty and so far unreliable. An exclusive look at how a failed investment for Shell is a terrible deal for Australia.
