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Shell Charts Progress on Qatar GTL, LNG Projects

Royal Dutch Shell plc said last week it is progressing on its Pearl GTL (gas-to-liquids) project as well as its Qatargas 4 liquefied natural gas (LNG) project. Shell is partnering in both Pearl GTL and Qatargas 4 with Qatar Petroleum, the state-owned oil and gas company of Qatar.

Pearl GTL will convert about 1.6 Bcf/d of gas into products such as gasoil, high-specification lubricants, base oils and chemicals feedstock. The project is designed to produce 120,000 b/d of natural gas liquids (NGL) and ethane, and 140,000 b/d of GTL products and is expected to be the world's largest GTL plant. Shell is funding 100% of the development costs under a profit-sharing agreement with the state of Qatar.

Shell has now entered the project's testing phase, having inaugurated the plant's control room, which includes nearly 1,000 control cabinets hosting 179 servers. Some two million metric tons of equipment and materials have been imported to the site, and there are about 48,000 workers on the project, Shell said. At the peak of construction, Pearl GTL installed enough steel and pipe to make 2.5 Eiffel Towers every month.

Qatargas 4 is designed to convert some 1.4 Bcf/d of gas into LNG and NGLs, adding to Shell's current worldwide LNG capacity of 18.5 million metric tons per year (mtpa). The project will have a capacity of 7.8 mtpa of LNG and some 70,000 boe/d of NGLs. Shell has a 30% stake in Qatargas 4, with partner Qatar Petroleum, under a tax-and-royalty structure. LNG will be sold to customers in China, Dubai and the United States, with further markets in development, the company said.

Once Pearl GTL and Qatargas 4 come on stream, Qatar has the potential to contribute some 350,000 boe/d of upstream production for Shell, and significant cash flows for the state of Qatar and the company, Shell said. "On today's basis these two projects alone would represent over 10% of our world-wide production. Qatar underpins Shell's growth plans to 2012 and will be a heartland for decades to come," said Shell CEO Peter Voser.

Major construction at both Pearl GTL and Qatargas 4 is scheduled to be completed by the end of 2010, with production ramp-up from late 2010 into 2011. Pearl GTL upstream production is expected to reach 320,000 boe/d. Qatargas 4 is expected to reach 280,000 boe/d.

Global LNG liquefaction projects have encountered delays over the last couple years, repeatedly pushing back analysts' estimates of when an influx of LNG cargoes might come to U.S. shores. Recently analysts at Wood Mackenzie said U.S. gas markets should expect LNG cargoes to the U.S. to ramp up from now through 2013, after which they will be in decline as sellers send shipments to more attractive European and Asian markets (see NGI, Nov. 23).

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