Shell Says Exports, Truck Fuel Among Options for U.S. Shale Gas

January 2012, Vol. 239 No. 1

Peter Voser, CEO of Royal Dutch Shell Plc, said it is weighing options for rising North American natural-gas output including exports and making liquid fuels.

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

“We are getting now into production phase in a big way,” Voser told the World Petroleum Congress in Doha, Qatar. “It’s about the right time to look for further options. We are looking at the usage of gas in a much wider way in North America. Given our huge gas reserves in the U.S. we are looking at a possibility to actually build a gas-to-liquids plant.”

Shell has invested $19 billion in its Pearl gas-to-liquids plant in Qatar to make transportation fuel. It’s the company’s largest project to date and it plans to build another “large scale” unit. The company has gas reserves in North America of 40 Tcf, about 12% of the continent’s total at the end of 2010. The company spent $4.7 billion to buy most of East Resources Inc., a shale producer with fields in Texas’s Eagle Ford area and Marcellus in Pennsylvania.

Shell is working on the Green Corridor project in Canada to convert gas into 300,000 tons of liquefied natural gas a year to fuel long-haul trucks from next year. The fuel will be offered to operators along western Canada’s busiest truck route from Calgary to Edmonton. Shell is looking at using the LNG-to-transport technology in China and Europe, Voser said. It will be a smaller market than using gas to fire power plants, “but it’s a good usage of the gas,” he said.

In June, Shell announced plans to build an ethylene plant in Appalachia, the first so-called cracker built in the region in half a century, to tap low-cost natural gas for making plastics. The cracker would process gas from the Marcellus Shale. The ethylene probably will be converted to polyethylene plastic at a second factory to be built at the site.