Royal Dutch Shell plc last Thursday announced that the company will not move forward with the proposed 140,000 barrels per day U.S. Gulf Coast gas-to-liquids (GTL) project in Louisiana and will suspend any further work on the project.
Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shells strict capital discipline.
CEO Peter Voser commented we are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our world-wide portfolio, to add value for shareholders.
Shell thanked the Governor of Louisiana, his staff, Parish officials, regulators and the community for the opportunity to consider locating this project in Louisiana, and the company said it looks forward to continuing a long, successful relationship with the state.
On September 24, 2013, Shell announced its selection of Ascension Parish, Louisiana for the proposed Gulf Coast Gas-to-Liquids facility, subject to final approval by Shell, saying that the company at a minimum would spend $12.5 billion and create 740 new direct jobs with an expected average salary of $100,000, plus benefits as well as approximately 3,900 new indirect jobs, for a total of more than 4,600 new permanent jobs in Louisiana.
A similar Shell gas-to-liquids project in Qatar, the Pearl GTL project, a partnership between Royal Dutch Shell plc and Qatar Petroleum, cost Shell about $19 billion. The Qatar-based Pearl GTL, the world's largest plant to turn natural gas into cleaner-burning fuels and lubricants, achieved full production towards the end of 2012.
However, the major difference between the projects according to reports was that Shell produces and owns all of the natural gas it uses at the Pearl facility, while it would have to buy natural gas from the U.S. grid in order to supply the Gulf Coast project.
