Royal Dutch Shell plc has chosen Ascension Parish in Louisiana as the location for a potential multibillion-dollar natural gas-to-liquids (GTL) facility, adding another gas-driven economic development win for the Pelican State.

According to the terms of an incentive agreement with the state, the company at a minimum would spend $12.5 billion and create 740 direct jobs if the plant is built.

“Selecting a site is an important step that allows us to conduct more detailed planning, technical analysis and begin the permitting process. Should we move forward with the project, we expect project costs to be well in excess of the minimum spend that was agreed upon with the state of Louisiana,” said Shell Executive Vice President Jorge Santos Silva, who directs integrated gas activities for Shell Upstream Americas.

Shell’s Gulf Coast GTL facility would be one of the first of its kind built to commercial scale in the United States. As a leading producer in the Gulf of Mexico, Shell also operates extensive onshore facilities in Louisiana, including its Norco and Geismar plants, a major training center in Robert, and corporate offices in New Orleans. In other areas of the country, however, the company is downsizing (see related story).

If built, the GTL project would use natural gas to create cleaner-burning transportation fuels, such as natural gas-based diesel and jet fuels and other products, such as specialty waxes and the building blocks for lubricants, plastics and detergents. The company said more than a year ago that it was considering such a facility in North America (see NGI, Feb. 4, 2012).

“Here in the heart of Louisiana’s world-scale petrochemical industries, the Gulf Coast GTL project would give thousands more of our people an opportunity for a rewarding career right here at home,” said Gov. Bobby Jindal. “We know that the final investment decision is yet to come, but we also know that Shell’s selection of Louisiana proves once again that there’s no better place in the world for major business investment.”

The state of Louisiana offered Shell an incentive package that would include a performance-based grant of $112 million to reimburse costs associated with necessary public road improvements, land acquisition and other infrastructure costs. Shell also would receive the state-sponsored workforce training. In addition, the company would qualify for Louisiana’s new Competitive Projects Payroll Incentive (12% payroll rebate for each GTL job), as well as the Industrial Tax Exemption Program.

Louisiana has cultivated GTL projects with Shell and other global energy companies in recent years. Low-cost natural gas, particularly from shale plays, is driving an industrial renaissance in Louisiana in the petrochemical and GTL sectors.

In December, Sasol announced a $16-21 billion GTL and ethane cracker complex that would be the largest manufacturing investment in Louisiana history (see NGI, Dec. 10, 2012). In January, G2X Energy announced a $1.3 billion GTL facility at the Port of Lake Charles that would yield chiefly gasoline (see NGI, Jan. 21). Recently, SGC Energia SA of Portugal and Houston-based Great Northern Project Development LP said they would spend $100 million to renovate a dormant steam methane reformer in the Westlake, LA, area and convert it to a GTL facility (see NGI, Sept. 9).

Shell built the first commercial GTL facility in Malaysia in 1993. In 2011, Shell began production at Pearl GTL in Qatar, a joint venture between Shell and Qatar Petroleum, the world’s largest GTL plant. The Gulf Coast GTL proposed project would be located in Ascension Parish near Sorrento, LA.

Separately last week, Pinto Energy LLC said it is developing a small-scale GTL facility in Ashtabula, OH, to take advantage of low-cost gas from the Marcellus and Utica shales (see related story). Pinto Chairman Guy Dove told NGI the facility could be the first of its kind in the country and advancements in GTL technology are making it possible.

The 2,800 b/d plant is to be built at Pinto’s 80-acre industrial site east of Ashtabula. It will convert gas from the Utica and Marcellus shale region into high-value specialty products (solvents, lubricants and waxes), as well as ultra-clean transportation fuels, said Pinto, which recently filed the project’s air and water permits and is in discussions with regional economic authorities for further local support.

Initially the project is starting out with two 1,400 b/d modular units. Combined they are expected to consume about 80 Mcf/d of natural gas. The facility could be expanded in the future, Dove said. High-quality diesel fuel is one product expected to be produced. It could be blended with lower-quality diesel at the site or at refineries on Lake Erie. Lube oils are another product that might be produced, Dove said.

GTL technologies, such as Fischer Tropsch (FT), have existed since the early 20th century, but recent technological advancements have radically transformed the GTL landscape, Pinto said. The company has chosen to utilize Velocys plc FT technology. “Velocys offers the most efficient and cost effective GTL technology on the market today,” said Pinto President Michael Reinart.

Ventech Engineers International LLC (Ventech), selected as the project’s engineering, procurement and construction contractor will build the modular GTL plants. The plant design is expected to be complete at the end of this year, and Pinto is seeking to start construction in the first half of 2014. Mechanical completion of the plant is expected in late 2015, with start-up in early 2016.

The plant’s location is expected to benefit from access to substantial existing infrastructure, including a waste water treatment plant, an air separation unit, a gas pipeline, product loading facilities for both barge and rail, and local customers for some of the plant’s bi-products. This project is planned to be the first phase of a multi-train facility at Ashtabula. In addition, Pinto has a portfolio of other sites where it intends to develop smaller scale GTL projects.

Dove said the Veolcys technology enables smaller-scale projects, such as the one planned by Pinto, to have favorable economics. “Heretofore it’s been multi-billion-dollar plants in Qatar or…the Louisiana coast. This is the first time we’ve been able to look at the same margins,” he said.