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Shell scraps proposed Louisiana GTL complex

12.06.2013  |  HP News Services

Shell halted plans to build a $20 billion gas-to-liquids (GTL) plant in Louisiana, citing potential costs and uncertainty about future crude oil and natural gas prices in the US.

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By BRADLEY OLSON

THE HAGUE (Bloomberg) -- Royal Dutch Shell halted plans to build a $20 billion gas-to-liquids plant in Louisiana, citing the potential cost and uncertainty about future crude and natural gas prices.

The project would have used natural gas to produce 140,000 bpd of liquid fuels and other products normally made from oil, the company said in a statement.

Despite ample United States gas supplies from a boom in shale production, gas-to-liquids isn’t “a viable option for Shell in North America,” the company said.

Shell started the first commercial gas-to-liquids plant in 1993, using a process developed in Germany and used to make fuels during World War II. The company completed the $19 billion Pearl gas-to-liquids facility, the world’s largest, in Qatar in 2011. Sasol, the largest producer of motor fuel from coal, announced plans last year to build a $14 billion gas-to-liquids plant in Louisiana.

“While we cannot speak to another company’s plans, we continue to view our proposed GTL facility in Louisiana as a very attractive opportunity as we advance it through the front-end engineering and design phase,” Russell Johnson, a spokesman for Sasol, said in an e-mail.

The economic viability of turning natural gas into fuels depends on the relationship between oil and gas prices. For a gas-to-liquids plant to make money, a barrel of oil has to trade at a ratio of about 16 times the cost of a million British thermal units of natural gas, Sasol CEO David Constable said in an interview last year.



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