The success of Royal Dutch Shell PLC's (RDSA.LN) new Pearl gas-to-liquids complex in Qatar will play a key part in determining the profitability of GTL as compared with liquid natural gas following the spike in Asian demand for LNG, Pearl GTL Managing Director Andy Brown said Tuesday.
The success of Royal Dutch Shell PLC's (RDSA.LN) new Pearl
gas-to-liquids complex in Qatar will play a key part in determining the
profitability of GTL as compared with liquid natural gas following the spike in
Asian demand for LNG, Pearl GTL Managing Director Andy Brown said Tuesday.
"With the rebound of appetite for LNG in the East [we have to ask] will
LNG or GTL give the highest netbacks? Proving
Pearl
will
aid that," said Brown, who was addressing the World XTL industry summit
here.
The plant, which Shell has developed in partnership with
Qatar
, will
use chemical processes to convert cheap and abundant natural gas from the
Middle Eastern country's North Field into high value transport fuels such as
diesel, as well as lubricants and feedstocks.
However, since Shell decided to invest in
Pearl
in
2006, the margins received from delivering GTL products, which are more closely
aligned to the oil price, have narrowed relative to LNG, demand for which has
grown sharply in
Asia
, fuelled by energy needs in
China
and
India
and
Japan
's
increased purchasing to replace lost nuclear power capacity.
"We have to be competitive against other forms of energy," said
Brown, adding that Shell Chief Executive Peter Voser has said he wants to see
how Pearl performs first before making further GTL investment decisions.
Pearl
, Shell's largest single project to date, will cost
between $18 billion and $19 billion. The official start-up date has yet to be
announced, but is expected to commence within weeks. The plant will be fully up
and running by mid-2012, Brown said. When running at full capacity
Pearl
will
account for 10% of Shell Group production, he said.
At full capacity, the integrated plant will process 320,000 barrels of oil
equivalent a day of gas from an offshore gas field into 120,000 barrels a day
of condensate and natural gas liquids and 140,000 barrels a day of middle
distillates, naphtha and base oil, according to Shell's website.
With cheap natural gas becoming increasingly abundant, Brown said Shell
wouldn't rule out expanding its GTL program under the right circumstances. "There
are opportunities around the world where you could take advantage of low price
gas [and] transform it into high quality fuel products," he said,
declining to give specific examples.
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