From the WSJ Europe's The Source blog:
Shell is moving ahead with plans to build plants in the U.S. that
could convert dirt cheap natural gas into high-valued diesel fuel,
hoping to profit from an almost tenfold mark-up in prices that many
analysts say is the biggest prize in the world of energy today.
With U.S. natural gas trading at the equivalent of $12 per barrel of
oil, and crude oil at over $100 a barrel, the opportunity for profit is
huge, but not without its risks. Building a gas-to-liquids facility
would cost billions of dollars and take most of this decade to complete.
The U.S. is already littered with money-losing long-term investments
that fell victim to unexpected shifts in natural gas supply and demand.
Shell is the world’s leading operator of gas-to-liquids (GTL)
facilities, which chemically convert natural gas into premium diesel,
lubricants and chemical feedstocks. It operates the world’s largest GTL plant in Qatar and a smaller one in Malaysia.
The profitability of these GTL plants was a major contributor to Shell’s consensus-beating first quarter profits of $7.28 billion.
Similar plants in the U.S. could be potentially very profitable, said
Shell’s Chief Financial Officer, Simon Henry. The company is looking at
sites in Louisiana and Texas as the possible location for a plant
producing at least 70,000 barrels a day of liquids from natural gas.
But the process is slow and complex. A final investment decision is
unlikely to be taken within the next year and construction would
probably take the rest of this decade, he said. The GTL plant in Qatar,
which has a capacity of 140,000 barrels a day, cost around $18 billion
and took five years to build....MORE