Will Royal Dutch Shell plc (ADR) (RDS.A) Build Another Gas-to-Liquids Plant?

That’s because Shell would likely have to build much of the plant overseas, due to higher wages and a shortage of skilled workers in the U.S. Gulf region. According to Bichsel, parts of the plant would likely be built in places such as South Korea and then shipped to the U.S. to be reassembled on the Gulf Coast site.

The company said that it is assessing various locations in Louisiana and Texas to be the potential site for such a facility, but added that it doesn’t expect to reach a decision on the project’s feasibility until around 2015. One additional motivation for building the plant might be that, like Pearl, prices for some of its products, such as diesel, would be linked to Brent oil prices and thereby provide a hedge against the company’s exposure to natural gas.

What’s next for GTL?
Even if Shell were to build the plant this year, it would be among just a handful of GTL plants around the world that are operated commercially. Besides Pearl in Qatar, commercial GTL plants can only be found in South Africa and Malaysia and number in the single digits globally.

However, interest in GTL continues to grow. In December, South African energy firm Sasol Limited (ADR) (NYSE:SSL) said that it would build the first commercial GTL facility in the U.S. The Johannesburg-based company has pinpointed Louisiana as the plant’s chosen location due to that state’s copious reserves of natural gas, and said it expects production from the facility to begin in 2018.

If natural gas prices remain low and Shell and others continue to improve on the economics of GTL facilities, we may see some more of them in the future. But that’s a pretty big if.

The article Will Shell Build Another Gas-to-Liquids Plant? originally appeared on Fool.com and is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Sasol.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.