Shell looking at gas-to-liquids plant in Louisiana

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Latest Oil and Gas News: 
April 6, 2012

(Wall Street Journal; April 4) - Shell is considering building a giant plant in Louisiana that would convert natural gas into diesel fuel, several people familiar with the company's plans said. The plant, which could cost more than $10 billion, would be similar in size to Shell's Pearl gas-to-liquids plant in Qatar. Pearl, which went online last June, cost almost twice to build as much as the possible Louisiana facility, and benefits from extremely low-cost gas feedstock - about 50 cents per thousand cubic feet.

Shell declined comment. The company is expected to take up to two years to develop detailed plans to determine if the plant is economically viable before submitting the project for approval by the company's board. Shell's plans are the latest sign that companies are seeking new ways to exploit extensive gas discoveries in the U.S. In September, South Africa's Sasol said it was undertaking an 18-month feasibility study for a $10 billion GTL facility adjacent to its chemical plant in Calcasieu Parish, La.

The technology to turn natural gas into a clean, low-sulfur diesel fuel was developed in Germany more than 70 years ago, but the high cost of building GTL plants generally has kept the technique from being commercially viable. The first large-scale plants were built in Qatar because the nation has an abundance of low-cost natural gas.

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