Shell is scrapping its proposed massive gas-to-liquids project on the U.S. Gulf Coast, the company said.

The Shell facility, to be located along the Mississippi River in Ascension Parish, La., was to produce 140,000 barrels a day of oil products from low-cost shale gas.

"Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell's strict capital discipline," the company said Thursday in a statement.

When Shell and the state of Louisiana announced the location for the proposed facility in September, Shell estimated it would spend $12.5 billion. The state had offered an incentive package for the project that included a $112 million grant.

Within three months the project was on course to cost more than $20 billion.

"We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our world-wide portfolio to add value for shareholders," Shell Chief Executive Peter Voser said in a statement.

The Gulf Coast project was expected to rival Shell's Pearl GTL facility in Qatar, the largest in the world, which produces 140,000 barrels of liquids a day. It was sanctioned in 2006 and took five years to build and commission.

Shell's Qatar project required about 50,000 workers to build and was completed at a cost of around $18.5 billion -- up from an earlier estimate of $10 billion, Platts reports.

The Qatar project uses that country's massive natural gas reserves, ensuring low prices, notes a report in The Wall Street Journal.

U.S. government approval of several natural gas export terminals is likely to cause a rise in domestic natural gas prices. Furthermore, many analysts predict the price of oil to fall as companies pump increasing amounts of crude oil.

Shell's decision "underscores the fact that oil prices are inflated and gas prices are depressed, and a slight reversal in the prices of the two commodities could have a significant negative impact," Fadel Gheit, an analyst with Oppenheimer & Co. was quoted as saying by the Journal.

Shell had estimated that at peak building activity, the project would have created as many as 10,000 construction jobs.

An economic impact analysis by Louisiana State University indicated the project would have resulted in more than 4,600 new permanent jobs in Louisiana and would have produced a total economic impact of $77.6 billion over the construction period and the first 15 years of operation.