Shell discloses $14-B cost for petrochemical plant, more than double street estimates
Royal Dutch Shell revealed during its recent fourth-quarter earnings call that the construction costs of its petrochemical plant have surged by 130%, surpassing the original estimate.
Initially speculated to be around $6 B, Shell reported that the actual cost reached $14 B, higher than the $10 B estimated by IEEFA and IHS. Critics, including IEEFA, had previously questioned the economic viability of the project due to poor plant economics, capital destruction, and competition from recycling.
The higher construction cost now poses a greater challenge for Shell to recoup its investment. In response, the company announced a shift towards smaller and replicable projects, acknowledging the financial risks associated with large fossil fuel-based endeavors.
The troubled operational history of the Pennsylvania plant, with fines for environmental violations and technical issues leading to temporary closures, further compounds the economic challenges.