Shell’s Major Shift to Natural Gas, US Gas-to-Liquids Plant?

Shell is moving into natural gas in a major way. In fact, natural gas will eclipse crude oil for Shell sometime next year by being more than 50 percent of Shell’s global production. Shell has committed to spending $2 billion to build an ethane cracker plant in the Marcellus region of the U.S., and now they are talking about building a gas-to-liquids plant. Shell invested an astonishing $19 billion in a gas-to-liquids plant in Qatar. Imagine that investment coming to the U.S.! Such is the transformative power of shale gas.

Royal Dutch Shell Plc, Europe’s largest energy producer, is weighing options for rising North American natural-gas output including exports and making liquid fuels, Chief Executive Officer Peter Voser said.

Shell will double North American gas production in the next three years to the equivalent of 400,000 barrels of oil a day as output from shale deposits rises, Voser said in an interview. Shell may channel gas into chemical production, an export project in Canada, and a program to use the fuel to power trucks, he said.

“We are getting now into production phase in a big way,” Voser said at the World Petroleum Congress in Doha, Qatar. “It’s about the right time to look for further options. We are really looking at the usage of gas in a much wider way in North America.”

Pumping gas trapped in shale rocks has transformed the U.S. into the world’s largest gas producer, cut prices about 75 percent from their 2008 peak and made exports to higher priced markets in Asia and Europe a viable option. The fuel will overtake crude oil to account for more than 50 percent of Shell’s global production next year, driven in part by the development of shale gas fields in Texas and Pennsylvania.

“This percentage goes up over the next years to come as most of our projects are actually gas projects,” Voser said. “Given our huge gas reserves in the U.S. we are looking at a possibility to actually build a gas-to-liquids plant.”*

Natural gas and associated products (like ethane) are so cheap due to shale gas, it’s making exports attractive, an area Shell is also closely reviewing. Right now, natural gas prices are the equivalent of $27 per barrel of crude oil. Crude oil on the open market is currently around $100 per barrel—so you can see why North American natural gas has captured the interest of major energy companies like Shell.

*Bloomberg News (Dec 6, 2011) – Shell Weighs Options for U.S. Shale Gas

  • Anonymous

    Hey Shell!!! NY is open for business. Andy Cuomo and Joe Martens are waiting at the PA border with unreasonable regulations and a high tax tax base. . . Hey, Hey why are you guys running away???. . . .hey where you going???? They might as well be sitting there in tanks with guns at the ready. This is what NY looks like to the gas and oil industry with these two.
    Could you imagine the economy if they installed that cracker plant where all of those businesses that fled due to NAFTA were here in the Southern Tier?. Wow  . . .Imagine. . . Imagine all the people, living and earning a wage…you hoo oooo. . . you may say I’m a dreamer. . . but I’m not the only one. . .I hope some day you will join us. . . and we all will prosper some.  

  • Jim Willis

    Thanks for the smile. 🙂

  • Anonymous

    Your poll on renewables was revealing . 61% favored either promoting or requiring renewables. And this was a poll that I expect didn’t include too many New York City Liberals! This just shows you ,Jim; that you and the Republicans in Congress don’t represent the  wishes of the people. There is a need to have both renewables and natural gas . That is why I support the Picken’s plan to encourage the use of natural gas by incentivizing  conversion of truck fleets to LPG or compressed gas. Both renewables and natural gas are better for the environment than coal or oil.Both strengthen are national economic and military security.

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  • tony

    As natural gas is much cheaper than regular gas and companies such as GM and Chrysler are producing vehicles such as pick up trucks with two tanks,( one for reg.gas and  one for natural gas) would it not be much easier to BLEND a combination of these two gases that will power all the current vehicles on the road today??? at a much cheaper cost to the consumer.

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