Royal Dutch Shell plc has chosen Ascension Parish in Louisiana as the location for a potential multi-billion-dollar natural gas-to-liquids (GTL) facility.
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.
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 Daily GPI, Feb. 3, 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 billion to $21 billion GTL and ethane cracker complex that will be the largest manufacturing investment in Louisiana history (see Daily GPI, Dec. 4, 2012). In January, G2X Energy announced a $1.3 billion GTL facility at the Port of Lake Charles that will yield chiefly gasoline (see Daily GPI, Jan. 18). Earlier this month, 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.
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.
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