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The plant was intended to take advantage of the US shale boom

06/12/2013

Shell scraps plan for US GTL plant

Pulls out as costs balloon to over US$20bn

Richard Jansen

ENERGY giant Shell has scrapped plans to build a huge gas-to-liquids plant on the US Gulf Coast, citing concerns over cost.

The Louisiana-based plant was intended to take advantage of the US shale boom, converting cheap gas into 140,000 bbl/d of much more expensive liquids, and had been offered generous tax breaks and grants by the state government. Unfortunately for Shell, early design work indicated that the project would be incredibly expensive – up from initial estimates of US$12.5bn to more than US$20bn.

“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,” the company says in a statement.

“[This is] due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell’s strict capital discipline.”

CEO Peter Voser adds “we are making tough choices here – focussing our efforts and capital on the most attractive opportunities in our world-wide portfolio.”

The decision has come as a major blow to Shell’s ambitions for applying its natural gas technology commercially. Its GTL technology is being used in the US$19bn Qatar’s Pearl plant, which was completed in 2011 and has a similar capacity to that planned for the company’s US project.