courtesy Royal Dutch Shell

Shell looks ready to go ahead with the building of new production plant worth $500 million at its Netherlands refinery Pernis— Europe’s largest at 415,000 barrels per day — the supermajor oil company’s Dutch headquarters said Thursday.

The hydro-desulfurization plant is intended to boost volumes of cleaner-burning shipping German-grade heating oil and will come on stream late in 2011.

A spokesman told Scandoil.com the company was committed to cutting the harmful element down to 50 parts per million from the standard 1,000 ppm. Observes expect Pernis partners like Statoil (10 percent) will make a premium off the high-quality heating oil sold.

Nearly all supply chain help has been “approved and agreed”, and construction will start this year.

Pernis looks to be part of $1 billion in upgrades announced by the company at a host of refineries aimed at diversifying volumes while helping shipping and the European Union meet national climate goals. There was also a need to take on heavier crudes, as competing refineries have adjusted to the new oil grade and Pernis partners have a stake in the heavy stuff.

Without an upgrade, “Pernis’s ability to meet its environmental mandate and remain competitive in the long term” could be in doubt, the group said. The plant already produces syngas and pure hydrogen for the fast-diversifying world fuels market.