Tuesday, September 24, 2013

Shell Picks Ascension Parish for GTL Plant

Hot off the press: Shell has picked a site in Ascension Parish, LA for the site of a natural gas to liquids plant. No final investment decision at this time, but a location near Sorrento seems to be a done deal.  The plant will cost around $12.5 billion and create 740 new permanent jobs.  Like the proposed Sasol project, the Shell plant will be a massive undertaking, expected to create 10,000 construction jobs.

While Gov. Jindal will take full credit, make sure to give thanks to the Haynesville Shale and all of the brave natgas independents that risked their companies to prove the play, which in the end only brought them pain and misery in the form of low commodity prices and oversupply.

So far news releases are not getting into where the gas will come from, but I would suspect that the Haynesville Shale will be a top source, especially since, unlike Sasol, Shell has a producing presence in the Haynesville Shale (as SWEPI - Shell Western Exploration and Production, Inc.).  The company certainly has a handle on the shale's potential.  Moving its gas from E&P to GTL would be a nice piece of vertical integration for Royal Dutch, although not quite Pearl GTL in Qatar.

Given the number of  proposed new manufacturing plants, LNG export facilities and GTL projects, the number and diversity of end users in a few years will be much stronger than today.  I suspect that the supply and demand dynamic will be a much different picture.

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