Russell: Floating LNG is Australia's Future, But Not a Miracle Cost Cure

Royal Dutch Shell has already taken the plunge, with construction of its Prelude floating LNG vessel underway in South Korea.

It will be the largest floating structure ever built, weighing some 600,000 tonnes, which is double the largest sailing supertankers.

Prelude will also be almost 500 metres long and is built to withstand the category 5 cyclones that occasionally strike off the Western Australian coast, where it will be permanently moored.

But it's not clear that Prelude is any more cost effective than building land-based plants.

The estimated capital cost is between $10.8 billion and $12.6 billion for Prelude's 3.6 million tonne per annum capacity.

This gives a cost of $3.5 billion per million tonnes of annual LNG capacity.

This is more expensive than the three LNG plants being built on Australia's eastern seaboard that will be the first to use coal-seam gas as a feedstock.