Dec 5, 2013 2 min read

BATON ROUGE, La. (AP) — Shell has delivered a blow to Louisiana’s industrial boom, saying it is scrapping a proposal to build a $12.5 billion natural gas-to-liquids plant.

The company announced Thursday that it was suspending further work on the project, which would have created 740 direct jobs and thousands more in spinoff employment.

Shell says the project isn’t viable because of factors including high cost and uncertainty in long-term oil and gas prices.

Gov. Bobby Jindal’s administration had offered an incentive package that included $112 million for road improvements, land purchasing and other infrastructure in Ascension Parish.

Economic Development Secretary Stephen Moret calls the abrupt decision very disappointing. But he says Louisiana is being considered for several other multibillion-dollar projects and has other large announced projects on the way.

In November, the Associated Press reported that Shell said it was still actively exploring a plan to build a huge natural gas processing plant in Western Pennsylvania, but cautioned that a final decision on whether to build the multibillion dollar plant wouldn’t be made for several years.

Shell has an option to buy the industrial site in Monaca owned by Horsehead Corp.

Energy experts said it’s too early to tell whether Shell will or won’t build the plant, since the final decision involves worldwide market conditions and competing projects, both within the company and by competitors. Shell CFO Simon Henry suggested in a late October conference call that the company would have to choose among several large new investments over the next year or two.