Posted on 12/17/2013 5:40:12 AM PST by thackney
Royal Dutch Shell plc (“Shell”) today announces that the company will not move forward with the proposed 140,000 barrels per day Gulf Coast gas-to-liquids (GTL) project in Louisiana and will suspend any further work on the project. Shell is the industry leader in GTL technology, and the company has carefully evaluated a number of development options for GTL on the US Gulf Coast, using natural gas feedstocks.
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.
Shell is the leading energy company in integrated gas, which includes liquefied natural gas and GTL. The company has built up substantial new options for integrated gas investment, particularly in Australia and North America in recent years.
CEO Peter Voser commented: “We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our world-wide portfolio to add value for shareholders.”
Shell thanks the Governor of Louisiana, his staff, Parish officials, regulators and the community for the opportunity to consider locating this project in Louisiana, and the company looks forward to continuing a long, successful relationship with the state.
Sorry to hear this.
That’s bad news. Hopefully Cove Point will be approved.
Another victory for the Anti-Capitalists in the Obamanation Administration.
US President Valerie Jarrett must be very pleased - - - .
Wonder if those costs included overcoming federal government hostility to any hydrocarbon fuel development?
I hate reading about this because significant parts of that plant probably would have been built here in Tulsa, the heat exchanger capital of the world. There’s still plenty of work here but more is always better.
Cost of US regulation is certainly a factor.
But what I had read in previous discussion, before Shell even proposed this plant (they have two others in Qatar and Indonesia) was the strong Natural Gas Demand in the US compared to the production rate.
I am sure Dear Leader is happy about this ! I am sure he would like to see the old outdated 55 mph speed limit back on the books ! I remember a few liberals I knew that wanted it badly back !
IIRC the price point where GTL is economically viable is where oil is about $70.00/barrel. Shell must see a future where the price is near or below that.
I don’t see that happening, but it would be nice for the consumer. (But bad for producers).
Regulatory costs in the US are a drag, to be sure. But it seems to me the greater risk to their hefty $20B outlay was currency risk. In other words, how strong will the dollar remain over the life of the investment, and in the face of that, could they justify it to the shareholders.
It is more than a straight oil price comparison.
Essentially, the question is can you spend billions of dollars on GTL plant while buying Natual Gas at X dollars and selling product for Y dollars, versus spending the same dollars on other uses of the Natural Gas.
In a place like Qatar, where the supply of Natural Gas is many, many times greater than the demand, GTL exports competes with LNG exports. In the US, it is far more complicated with less in margins.
Indeed. I do not doubt the massive American demand for Natural Gas. But instinct is telling me that rational companies have decided the expense and uncertainty caused by Democrats’ hatred of hydrocarbon fuel preclude development of the source.
I suspect our irrational federal government has become the greatest risk for companies such as Shell.
Good ol’ Piyush ‘Bobby’ Jindal done did the dog on this one!
One more reason for the rest of America, to learn about this anchorbaby/Governor of Louisiana.
Price of natural gas going up
Not much change beyond normal seasonal cycles.
U.S. Price of Natural Gas Delivered to Residential Consumers
http://www.eia.gov/dnav/ng/hist/n3010us3m.htm
U.S. Price of Natural Gas Sold to Commercial Consumers
http://www.eia.gov/dnav/ng/hist/n3020us3m.htm
United States Natural Gas Industrial Price
http://www.eia.gov/dnav/ng/hist/n3035us3m.htm
U.S. Natural Gas Electric Power Price
http://www.eia.gov/dnav/ng/hist/n3045us3m.htm
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