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Shell spends $19 billion to convert natural gas to clean diesel

Shell spends $19 billion to convert natural gas to clean diesel

Posting in Energy

Royal Dutch Shell is putting the finishing touches on a $19 billion plant in Qatar that will convert the area's abundant natural gas reserves into an odorless diesel.

Royal Dutch Shell is putting the finishing touches on a $19 billion plant in Qatar that will convert the area's abundant natural gas reserves into an odorless diesel, according to a new report.

The Wall Street Journal calls the move "one of the most expensive gambles on clean fuel in the history of the energy industry."

Named "Pearl GTL," the project is, in part, a way for the company to flex its corporate muscles and show its rivals that it can handle massive, complicated projects -- and potentially make a ton of money from them.

The reason? Oversupply of natural gas has pushed its price down considerably. If Shell can develop a sustainable way to turn gas into oil products, that will be much more attractive than crude, currently selling at more than $80 a barrel.

The plant is set to begin production next year, and is the latest step in major oil companies' attempts to make lemonade out of lemons. Blocked from easily accessible crude in the Middle East, companies are looking for alternative oil locations (Alberta, Canada and North Dakota) and new technologies, such as algae-derived biofuels.

Shell's new gas-to-liquids, or GTL, plant uses chemical reactions to change the composition of gas molecules. The process yields an odorless, colorles, diesel-like "clean" fuel.

A major hurdle is that GTL requires massive amounts of energy to make the conversion -- two steps forward, one step back, if you will.

Worse, critics say the technology isn't really a good solution in most locations.

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure