Shell Begins Commissioning First Phase of $19 Billion Pearl Gas-to-Liquid Project in Qatar

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Researched by Industrial Info Resources (Sugar Land, Texas)--Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) has begun testing the first phase of the $19 billion Pearl gas-to-liquid (GTL) project in Ras Laffan Industrial City in Qatar.

The Pearl GTL complex is being developed by Shell in conjunction with the government of Qatar through state-owned Qatar Petroleum (Doha, Qatar) and will be the largest energy project in Qatar. The complex will produce liquid fuels, chemical feedstock and lubricants from natural gas piped onshore through two 30-inch-diameter pipelines from the North Field natural gas reservoir.

According to a Shell spokesman, the steam boilers for the project are now in operation, and Phase II of the project is expected to begin ramping up next year. Shell expects the major construction works of both phases of the complex to be completed by the end of this year.

The Pearl GTL project was launched in July 2006 to develop the offshore natural gas resources in the North Field of Qatar, transport and process the gas onshore to produce natural gas and ethane, and convert the remaining gas to liquid hydrocarbon products.

About 1.6 billion cubic feet of gas will be extracted each day from 11 wells in the North Field. In the first stage, the facility will produce about 120,000 barrels of oil equivalent each day of liquefied natural gas (LNG), condensate and ethane. Dry gas will be used as a feedstock for the GTL complex that will produce about 140,000 barrels of oil equivalent each day of liquid hydrocarbon products from two trains, each with a capacity of 70,000 barrels per day.

The Pearl GTL plant uses the proprietary Shell Middle Distillate Synthesis technology, which has been developed over three decades and has been proven commercially at the Bintulu GTL plant in Malaysia since 1993.

In addition to the boiler startup, Shell has begun testing the plant's control room, which contains 179 computer servers housed in more than 1,000 control cabinets. The control room is connected by about 5,850 kilometers of cables to every part of the complex. In March this year, the first of two platform structures, each the size of a 10-storey building, left the fabrication yard in Dubai to be positioned in the North Field on a pre-assembled support structure at a depth of 36 meters below the surface of the water.

The Shell Pearl GTL project is part of Shell's $21 billion investment in Qatar, with another significant project being the Qatargas LNG project, which will have a production capacity of 7.8 million tons each year and which is being developed by a joint venture between Shell (30%) and Qatar Petroleum (70%).

Qatar has set a target of developing an LNG-production capacity of 77 million tons each year by the end of this year. In January, Qatari Oil Minister Abdullah al-Attiyah stated that the annual production capacity in Qatar at the time was 54 million tons.

Shell is not the only company pushing GTL projects in Qatar. Qatar Petroleum has also been working in conjunction with several other oil majors on world-scale GTL projects, including ExxonMobil Corporation (NYSE:XOM) (ExxonMobil) (Irving, Texas), ConocoPhillips (NYSE:COP) (Houston, Texas), Sasol Limited (NYSE:SSL) (Johannesburg, South Africa) and Marathon Oil Corporation (NYSE:MRO) (Houston, Texas).

However, several of these projects were put on hold, in particular the Marathon and ConocoPhillips GTL projects, with Qatar Petroleum expressing a desire to ensure that the North Field gas resources were managed in the most effective manner. The ExxonMobil--Qatar Petroleum GTL project was abandoned in February 2007 in favor of a natural gas project in the Barzan gas field.

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