Dubai: Qatar Petroleum and Royal Dutch Shell yesterday announced they would proceed with the Pearl gas-to-liquids (GTL) project, an integrated development, transport and processing hub for Qatar North Field gas resources.

Just months ago the status of the project was cast in doubt amid rising costs worldwide for oil and gas projects, due to shortages of equipment, labour and raw materials such as steel.

The Pearl GTL project may cost as much as $18 billion, triple earlier estimates, based on company-supplied figures. The gas will cost $4-to-$6 per barrel of oil equivalent to produce, the company announced.

Pearl GTL will extract natural gas liquids and ethane, and convert remaining gas into liquid hydrocarbon products through the construction of gas-to-liquids complex in Ras Laffan Industrial City.

Upstream, 1.6 billion cubic feet per day of wellhead gas will be produced from the North Field and transported and processed to produce approximately 120,000 barrels of oil equivalent per day of condensate, liquefied petroleum gas and ethane. It is estimated the North Field holds recoverable resources in excess of 900 trillion cubic feet. Over its lifetime the project will produce upstream resources of approximately 3 billion barrels of oil equivalent.

Downstream, dry gas will be used as feedstock for a new onshore, integrated GTL complex, which will manufacture an additional 140,000 barrels per day of liquid hydrocarbon products. The Pearl GTL complex will consist of two 70,000 b/d GTL trains and associated facilities. The plant will produce liquid products and fuels comprising naphtha, GTL fuel, normal paraffins, kerosene and lubricant base oils.

Shell's oil and gas reserves at current production levels will run out in about nine years, the lowest level among its peers. Last year, Shell replaced 67 percent of its output, compared with 95 percent for BP Plc, using U.S. accounting rules. Shell is betting on rising demand for cleaner-burning car fuels, into which GTL can be blended to lower sulfur content.

- With inputs from agencies