A Pearl in the Sand: Royal Dutch Shell Gambles in Qatar

Royal Dutch Shell has placed a $19 billion bet on converting natural gas into clean burning diesel.  This project is a big deal for Shell beyond its price tag.  This is their moment to shine.  In recent years many projects have been delayed or had cost overruns, in addition to the fact that they haven’t had an increase in output in seven years.  Pearl GTL is a gas-to-liquids facility.  It is believed that this is a one of a kind project due to sheer size and the expensive technology.  “GTL is an evolutionary dead-end for the oil industry,” says Bernie Picchi, a long-time observer of the sector and portfolio manager at Palisade Capital Management LLC. “Pearl is very impressive and will be very profitable for Shell, but it’s essentially a one-off.”1  The project should begin production in the next year with construction to be completed in the coming months.  Currently this is the biggest development within the industry and it will sit on 556 acres upon completion.  Only time will tell us whether GTL is truly the “fuel of the 21st century”.2

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One response to “A Pearl in the Sand: Royal Dutch Shell Gambles in Qatar

  1. Gas-to-liquids technology (GTL), though not an innovative technique is quite useful to convert the natural gas, which used to be flared into more valuable fuel oils. In this view GTL gives a fillip to our continuous effort towards maximum resource utilization. The only impediment before it is the large scale of economics for its successful adoption, but with improving technologies the product cost is expected to decrease. As such, Shell already operates the 12,000 bbl/day GTL technology facility at Bintulu, Malaysia and its upcoming facility in Qatar only highlights its recent success. This has lead to spate of interest among other major oil and gas companies most notably Exxon Mobil with growing emphasis and legislation for low sulfur aromatic fuels in Europe and the US. Overall, GTL seems to have an exciting future ahead.

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