He boasted that the project showed ‘there’s no better place in the world for major business investment’. But, without warning, last night it pulled the project.
By Peter Campbell: PUBLISHED: 6 December 2013
Shell last night pulled the plug on a £12billion scheme to turn gas into jet fuel – and ruled out doing any work in the area in the whole of the US.
The oil supermajor had previously trumpeted a new facility in Louisiana that it said would create almost 5,000 permanent jobs in the area.
The State’s Governor Bobby Jindal had even promised tax incentives of £70million to help the company make the project work.
He boasted that the project showed ‘there’s no better place in the world for major business investment’.
But, without warning, last night it pulled the project.
In a late announcement made after the stock market closed, the group said it ‘will not move forward and will suspend any further work on the project’.
Using a highly expensive technique, it had been planning to turn natural gas into a series of other fuels, from solid fuel to jet fuel and diesel.
The proposed gas-to-liquids (GTL) site would have produced 140,000 barrels per day.
But it blamed costs and uncertainty over the future of the oil price for cancelling the work.
The group was last night unable to say how much it had spent on the venture.
It said: ‘Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell’s strict capital discipline.’ Chief executive Peter Voser said it was a ‘tough choice’.
Shell already owns a GTL plant in Qatar, which cost it £11.6billion and – the company said – offered better economic returns.
A major difference between the projects was that Shell produces and owns all of the natural gas it uses at the Pearl facility in Qatar, but would have had to buy natural gas from the US grid in order to supply the Gulf Coast project.
In September local Louisiana media reported that up to 10,000 jobs could have been created during construction of the plant.
At the time Governor Jindal said it was a ‘historic new opportunity for Shell to potentially expand its manufacturing operations onshore in a world-class, gas-to-liquids facility in Ascension Parish on the Mississippi River.’
He added: ‘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.’ The project was also due to bring an extra £20million in extra investment in roads and infrastructure with it in order to accommodate construction vehicles and extra traffic.
Shares in Shell, which have fallen more than 3 per cent over the last year and finished trading before yesterday’s announcement, fell 2p to 2013.5p.
The company said the announcement, which came out at 6pm, had to be made at that time because it was issued by the group’s office in Houston, Texas.