There’s an interesting piece of business news in the Baton Rouge Advocate today…

Sites in St. James and Ascension parishes are being eyed for a “large” but mysterious industrial project that some officials have described as being bigger than the $3.4 billion Nucor Corp. steel mill being built in Romeville, St. James Parish officials said.

A county in Texas is also being looked at for the project that appears to be tied to the energy sector and is trying to take advantage of Mississippi River access and low natural gas prices due to advances in shale exploration, parish officials said. Multiple sites on the east and west banks of St. James were being considered.

Dubbed Project Frontier, the prospective facility was mentioned as part of a broader discussion on local tax incentives during a closed gathering of representatives of major St. James Parish taxing jurisdictions about a month ago at the Parish Courthouse in Convent, St. James Parish officials said.

The meeting was an attempt to have all the taxing jurisdictions at the table on possible future incentives for major projects to avoid the issues that arose over local tax incentives for Nucor.

St. James Parish President Timmy Roussel said the officials had gathered to discuss “what we can live with and what we can’t live with and we needed all of the stakeholders’ opinions.”

He said no precise conclusions were reached then on incentives and any offers would first be brought into public view and have to get required approvals by the Parish Council and the School Board.

Roussel said he could offer few details on Project Frontier at this time, such as what company is behind it, because he has signed a non-disclosure agreement.

We think we know what this is, because we reported on it a few months ago…

As such, the word is Shell is going to build a new GTL facility, on par with the size of Pearl, in America so as to take advantage of the more localized demand. And the word is within three to six months, Shell expects to announce a decision on a site somewhere on the Gulf Coast. And Louisiana, with its plentiful supplies of “dry gas” coming out of the Haynesville Shale and its world-class natural gas infrastructure, could very well win out as the domicile for the facility. Within 18 months of the site selection Shell expects to finalize its construction plans, and it’s expected that four years later a GTL facility which employs some 10,000-12,000 permanent workers will go on line.

Considering that it’s been 40 years since a new refinery has been built in the United States, this could be a colossal piece of news for the region. It’s also a significant piece of news for the natural gas industry – because Shell anticipates its American facility will take in some 1.3 billion cubic feet of natural gas per day, and that could be enough to move the price of natural gas upward. Which is good news for landowners in places like the Haynesville Shale, who are disappointed to see wells shut in thanks to the current poor prices for gas.

Shell’s plans could provide another outlet for America’s shale gas revolution, a significant boost to America’s refining capacity, a boon for the construction industry in the Gulf Coast region and a game-changing job creation engine for the community its facility ultimately is sited in.

The Shell GTL project – GTL stands for “gas-to-liquids,” which is a multi-stage refinery process which turns natural gas into kerosene for jet fuel, naptha for gasoline, a super-high-grade diesel fuel and some outstanding industrial lubricants – could be as much as a $16 BILLION project. That’s what Shell’s GTL facility in Qatar costs; that facility puts out 140,000 barrels a day of liquid fuels. By comparison, ExxonMobil’s refinery in Baton Rouge has a capacity of 502,000 barrels per day and the Chalmette refinery jointly owned by Exxon and PVDSA puts out 192,000 barrels per day. Phillips 66’s Belle Chasse refinery is a 247,000 bpd facility and Marathon’s Garyville refinery puts out 464,000 bpd.

For comparison’s sake, that massive refinery expansion Marathon finished in Garyville in 2010 was a $5.3 billion project, which was the high-water mark of industrial construction projects in recent Louisiana history. This would be three times as big. It would be also more than three times as large as the $5.2 billion Panama Canal expansion.

And Shell’s GTL project isn’t the only one set to get rolling in Louisiana. It turns out that Sasol, the South African company which has a long pedigree in turning feedstock other than crude oil into transportation fuel (Sasol’s original core business was to turn coal into automotive fuels and rapidly expanded to natural gas as well), is in the game for a Louisiana facility. From the company’s website…

In North America, the shale gas phenomenon presents exciting opportunities for GTL. As improved technology practices continue to drive down the cost of extracting shale, the price differential between natural gas and oil has widened considerably.

GTL is able to take advantage of this differential by producing oil equivalent fuels from a natural gas feedstock that unlock the full value of natural gas. Sasol is actively looking at the feasibility of establishing GTL project opportunities in Louisiana in the USA and Alberta in Canada through projects that will continue to contribute to energy security and economic growth.

Interestingly enough, both Shell and Sasol operate GTL facilities in Qatar at present. Sasol also has current or future GTL facilities in Nigeria, South Africa and Uzbekistan.

And Sasol, which announced plans for a GTL facility a year ago – it’ll be built next door to its current chemical plant in Calcasieu Parish – is now talking about that facility being a $15 billion project. Construction is planned to move forward in January.

Which means that between Shell and Sasol, it’s entirely possible that Louisiana will be looking at over $30 billion in industrial construction projects to create two new refineries producing perhaps as much as 250,000 barrels per day of liquid transportation fuels and more than 20,000 permanent jobs (with three times as many jobs, or more, being indirectly created).

And Louisiana, which has natural gas resources so rich that virtually no corner of the state isn’t at least potentially involved in producing it, would then become the spearhead of American energy independence.

There are obstacles, of course. You can bet that the environmentalists will fight both of these two projects tooth and nail, and should the current president gain re-election it’s quite possible that the plans currently being bandied about would die on the vine.

But it’s clear that the market won’t tolerate a valuable fuel like natural gas being priced so low that production is shut in – not with gasoline prices at record highs and crude oil prices making America’s enemies rich. That level of disparity isn’t sustainable and won’t continue. The production at GTL plants like the ones Shell and Sasol contemplate is the bridge.

And that production looks like it could be centered in Louisiana.