Shell axes plans for $20bn flaship plant in US

Shell axes plans for $20bn flaship plant in US

Royal Dutch Shell has axed plans to build a flagship plant in the US that would have converted gas to jet fuel over concerns about the $ 20bn cost of the project.

The oil giant said the gas-to-liquids (GTL) project in the Gulf of Mexico was “not a viable option for Shell in North America” amid “uncertainties on long-term oil and gas prices and differentials”.

It comes as the US enjoys a shale boom that has put crude prices under pressure.

The cost of the plant ballooned from an original estimate of $ 12.5bn. But despite Louisana offering Shell tax breaks and a grant of $ 112m, the company decided to abandon the 140,000 barrel per day site.

Peter Voser, chief executive, said: “We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our worldwide portfolio, to add value for shareholders.”

Shell’s decision leaves South Africa’s Sasol as the only energy company with plans to build a GTL plant in Louisiana.

“We continue to view our proposed GTL facility in Louisiana as a very attractive opportunity as we advance it through the front-end engineering and design phase,” a Sasol spokesman told Bloomberg.

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