Shell have developed a "Middle Distillate Synthesis" process that allows liquid fuels to be generated from natural gas. Named SMDS, the process produces fuels that are entirely free from aromatic compounds and sulfur. These greatly reduce emissions of particulates and the acid rain gas, sulfur dioxide, from vehicle exhausts.

Shell commissioned an independent life cycle analysis of their SMDS process. It showed that, in addition to producing cleaner fuels, it had less of an impact on the environment than a typical, modern oil refinery.

Shell's SMDS plant in Malaysia has been operating since 1993 and produces 470,000 tonnes a year of petrol, kerosene, naphtha and specialty products including detergent and solvent raw materials.

Natural gas is mostly methane. It is split into Hydrogen and carbon monoxide under high pressure and temperatures of 1300-1500^oC in the gassification plant.

Long chains of hydrocarbons are grown by combining the hydrogen and carbon monoxide using an iron or cobalt catalyst. Products such as petrol, naptha or kerosene are isolated by fractional distillation.