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Shell to build LNG plants in U.S., Canada for transport fuel

Gasoline prices are displayed on a signboard at a Shell gas station in Encinitas, California, February 19, 2013. REUTERS/Mike Blake
Gasoline prices are displayed on a signboard at a Shell gas station in Encinitas, California, February 19, 2013. REUTERS/Mike Blake

(Reuters) - Royal Dutch Shell said it would build two small-scale gas liquefaction units in Louisiana and Ontario as part of an investment plan to unlock value in the use of liquefied natural gas as a transport fuel.

"These two units will form the basis of two new LNG transport corridors in the Great Lakes and Gulf Coast regions," Shell said in a statement on Tuesday.

Shell said it was also working to use natural gas as a fuel in its own operations, which follows an investment decision in 2011 on a similar corridor in Alberta, Canada.

Shell, which has bet the most heavily of all the top oil firms on a future for cleaner-burning natural gas, said it is using its expertise to make LNG a viable fuel option for the commercial market.

In the Gulf Coast corridor, Shell plans to install the liquefaction unit at its Geismar Chemicals facility to supply LNG along the Mississippi river and intra-coastal waterway and to exploration areas offshore Gulf of Mexico and onshore Texas and Louisiana.

Shell plans to build the liquefaction unit at its Sarnia Manufacturing Centre for the Great Lakes corridor. This project will supply LNG fuel to all five Great Lakes, their bordering U.S. states and Canadian provinces and the St. Lawrence Seaway.

Each unit will be able to produce 250,000 tons of LNG, Shell said.

The two liquefaction units are expected to begin operations and production in about three years after final regulatory permission.

A liquefaction plant cools natural gas at very low temperatures to turn it into liquid.

In late January, Shell teamed up with Kinder Morgan Inc to export LNG from the United States to take advantage of higher prices abroad.

(Reporting by NR Sethuraman in Bangalore; editing by Jane Baird)

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