Shell announces multi-billion Gulf Coast Project

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Projects like this will increase demand for natural gas in the U.S.
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With the announcement of a Gulf Coast site for a proposed billion-dollar project, Royal Dutch Shell Plc (NYSE: RDS) is furthering efforts to grow the natural gas-to-liquids sector of the energy industry.

Shell's investment in the project would be a minimum of $12.5 billion, a figure set in the company's incentives agreement with the state. The project, which would be constructed on a 2,400-acre space in the Ascension Parish of Louisiana, would produce 140,000 barrels of petroleum products per day. Shell’s Gulf Coast GTL facility would be the first of its kind to be built commercially in the U.S.

As part of the deal, which is subject to a site evaluation and preliminary engineering studies, Louisiana offered Shell an incentive package that included a performance-based grant of $112 million to reimburse costs associated with necessary public road improvements, land acquisition and other infrastructure costs, according to a statement from Louisiana Gov. Bobby Jindal's office.

Shell also would receive the services of a workforce training program, and it would qualify for Louisiana's new Competitive Projects Payroll Incentive, which is a 12 percent payroll rebate for each gas-to-liquids job, as well as the Industrial Tax Exemption Program.

If the project comes to fruition, it 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, according to the statement from the governor’s office.

“Selecting a site is an important step that allows us to conduct more detailed planning, technical analysis and begin the permitting process,” Jorge Santos Silva, executive vice president for integrated gas activities for Shell’s upstream Americas business, said in a statement. “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.”