Shell to replicate Pearl GTL with Lousiana GTL project
Since the South Africa company Sasol had announced last year to select its site in Lake Charles in Westlake of Calcasieu Parish in Louisiana, Shell opted also for the Lousiana Gulf Coast for its gas-to-liquids (GTL) project in USA.
At the CERAWeek, last year, Shell CEO Peter Voser had officialized its intention to replicate the Pearl GTL project from Qatar into the USA in order to benefit from the cheap feedstock provided by the shale gas development.
The profitability of the GTL business model results from a combination of parameters.
On the top of the list of these parameters we shall find the spread between crude oil price and the natural gas price.
With a crude oil maintained by OPEC around $100 per barrel and a natural gas price at the Henry Hub fluctuating between $2 and $5 per million British Thermal Unit (btu) the spread between oil and gas price cannot hardly be better.
In addition all the analysis converge to indicate that this situation should last for many years in respect with the 100 years lifespan of the resources of natural gas in USA and the increasing challenges to develop new crude oil fields.
The other parameters to influence GTL projects in USA is the evolution of the demand for more efficient and cleaner transportation fuels.
Even though the GTL process is very complex and requires a lot of energy, it delivers a sulfur free and aromatics free diesel with a much higher cetane index (above 74) compared with common fuels (around 40).
The consequence is that GTL fuels are much more energetic per liter, thus they reduce the consumption as illustrated by the successful Shell diesel powered Audi car in Le Mans endurance races in France.
In this context the Sasol GTL project and the Shell GTL project in the USA could contribute to meet the increasing demand of the domestic market for diesel transportation fuel while reducing the carbon dioxide and sulfur emissions.
Shell to reduce space to save costs on Louisiana GTL
At that scale it will be the largest project ever to be built in Louisiana.
The Louisiana GTL plant would have two trains of 70,000 b/d each that should be built in phases.
In Qatar, Pearl GTL was due to cost $10 billion capital expenditure, but it ended up above $18 billion.
As the first plant being built at that scale, it accumulated all the learning lessons.
Shell is now expecting to take the benefits from these lessons learnt, from the current economical downturn to shave materials costs and from a second generation of catalysts that should improve the efficiency of the GTL process and allow a construction in much more compact way as in Qatar.