Shell has put on hold its plans to build up to three small-scale gas liquefaction plants and an unspecified number of LNG storage facilities in North America that would have served the nascent market for LNG transportation fuel.

Two of the shelved liquefaction plants would have been in Canada, with one at Shell's Jumping Pound gas complex in southern Alberta, about 21 miles (33km) west of Calgary, and the other in Sarnia, Ontario. The third plant was planned along the US Gulf coast, in Geismar, Louisiana.

Shell is still confident that the North American LNG transportation market will be strong, but wants to ensure its portfolio is flexible to take advantage of opportunities, as demand has not grown as fast as initially expected, a company spokeswoman told Argus today.

LNG is expected to be cheaper in the long term than diesel in North America, but there are large up-front costs in developing natural gas engines for high-horsepower applications and to establish LNG distribution networks.

"It's important to emphasize that we believe there is a considerable opportunity for Shell globally and in North America in LNG as a transport fuel," the spokeswoman said. "Having said that, LNG for transport is still an emerging market, and we must be balanced in our approach."

Shell has pulled back from a number of North American investments in the past year as it reassesses how it funds and operates large oil and gas projects around the globe. The company took a $2bn write-down on its US shale business last year and started to sell off assets. In December the company said it was abandoning plans to build a multibillion-dollar plant in Louisiana that would have converted natural gas into diesel, citing skyrocketing costs.

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