Shell could build $12.5 billion plant in Ascension

09 25, 2013 by The Advocate

750 new jobs are projected

Shell is considering building a $12.5 billion gas-to-liquids facility in Ascension Parish that would create 740 new direct jobs with an expected average salary of $100,000, plus benefits.

Shell is evaluating a site with frontage on La. 70 and La. 44 near Sorrento.

The company said there is no guarantee it will build the facility, and it will be several years before the company makes a final decision.

The project must first go through a multi-tiered, multi-year evaluation process.

Shell’s cautionary statements did little to dampen the enthusiasm of local and state officials.

“It’s just phenomenal that they chose the site. That was the key. We’ve been working on this for about two years now,” Ascension Parish President Tommy Martinez said.

Adam Knapp, president and chief executive officer of the Baton Rouge Area Chamber, described the announcement as “an enormous win” for the area’s chemical/petrochemical industry and “a huge boost” to the sector’s momentum and the region’s economy.

Gov. Bobby Jindal called the project a historic opportunity for Shell and proof there’s no better place in the world than Louisiana for major business investment.

Shell’s Gulf Coast GTL plant would be one of the first commercial-scale facilities in the United States.

The plant would use natural gas to create cleaner-burning transportation fuels, such as natural gas-based diesel and jet fuel. The plant could make other products, such as specialty waxes and the building blocks for lubricants, plastics and detergents.

Executive Vice President Jorge Santos Silva, who directs integrated gas activities for Shell Upstream Americas, said if the company moves forward with the plant, the costs will be “well in excess” of the $12.5 billion amount agreed upon with the state.

Shell spent close to $20 billion to build the Pearl GTL facility in Qatar.

Louisiana Economic Development Secretary Stephen Moret said it would be difficult to overstate the economic impact of the project on the Capital Region and the state.

“It would be the biggest single manufacturing project in the history of the Capital Region, and one of the top three largest manufacturing projects in state history,” Moret said.

In addition to the 740 permanent jobs, the proposed plant will generate around 3,900 indirect jobs, according to an LSU economic impact study commissioned by LED.

The study estimates the project’s total economic impact at $77.6 billion over the course of construction and the first 15 years of the plant’s operation.

Shell estimated at its peak, the gas-to-liquids plant would create 10,000 construction jobs.

Louisiana offered Shell an incentive package that includes a $112 million performance-based grant that would cover the cost of road improvements, land acquisition and other infrastructure costs.

Shell has agreed to four-lane La. 22 from Interstate 10 to La. 70 and four-lane La. 70 from its intersection with Interstate 10 to the Sunshine Bridge.

Shell also will receive help with workforce training through LED FastStart.

The plant also would qualify for the state’s new Competitive Projects Payroll Incentive program, which offers a 12 percent payroll rebate for each job created. The plant would qualify for the state’s Industrial Tax Exemption Program, which exempts the facility from property taxes for 10 years.

Ascension Parish Council Chairman Chris Loar said a local incentive, possibly an annual payment instead of the full amount of property taxes, has been discussed. Shell, the parish government, the sheriff and school board have taken part in those talks, but nothing has been formalized.

Martinez said Ascension has been asking the state to make the highway improvements for many years. In 1999, the state Department of Transportation and Development included the improvements on its project list only to drop them.

“I’m glad to see that’s going to happen here no matter what happens,” Martinez said. Ascension will get “a double whammy” from the improvements, which will help Nucor Corp. and CF Industries and their workers. Nucor’s direct-reduced iron plant in Convent is close to opening, and CF Industries has begun a $2.1 billion expansion of its nitrogen plant near Donaldsonville.

Martinez said the proposed site for the Shell facility covers around 2,500 acres and lies roughly a mile down La. 70 from the Motiva refinery.

Ascension’s industrial corridor has seen several multibillion-dollar projects in recent years, driven mainly by low prices for natural gas, which the plants use as a fuel and feedstock.

Loar said the gas-to-liquids plant, CF Industries’ expansion and Methanex’s decision to move two methanol plants to Geismar show Ascension is the heart of Louisiana’s economic renaissance.

The gas-to-liquids facility surfaced publicly in September 2012, when St. James Parish officials discussed something called Project Frontier. There were few details. The project was related to liquid fuels and could dwarf Nucor’s proposed $3.4 billion steel complex in St. James.

According to a June 28 article by energy analyst, Shell was considering sites in Louisiana and Texas for a facility that could produce at least 70,000 barrels per day, or 2.9 million gallons, of liquids from natural gas.

The higher-value synthetic diesel produced at the plant could be exported to Europe and Asia, according to the article. Shell did not expect to make a decision on the plant’s feasibility until around 2015, and the company declined to even give a date for a final investment decision.

The gas-to-liquids plant, if built, could be Shell’s second natural gas-related facility in Ascension Parish.

In March, Shell and its affiliates announced plans to build a small-scale natural gas liquefaction plant in Geismar. That plant and another in Canada will provide fuel for commercial transportation customers.

The Geismar facility will produce 250,000 tons of liquefied natural gas each year, or around 400,000 gallons a day, according to Shell.

The unit, planned for its Geismar Chemical facility, will supply LNG along the Mississippi River and the Gulf Intracoastal Waterway, to onshore exploration areas in Texas and Louisiana, and offshore in the Gulf of Mexico. Shell did not release the estimated cost for that facility.