The expansion of the Motiva refinery in Port Arthur, Texas, to a capacity of 600,000 barrels a day has started operations, said Simon Henry, Chief Financial Officer of Motiva partner Royal Dutch Shell PLC (RDSB.LN) Thursday.

The crude distillation unit at the plant is now processing oil and the hydrocracker is expected online by the end of this quarter, he said in a conference call with reporters.

Shell is assessing two sites in Texas and Louisiana where it could build new plants to convert cheap natural gas into high-priced diesel fuel, Henry said. Such plants could be very profitable in the U.S., but a final investment decision will take at least a year, he said.

Shell will have the necessary permits to drill three exploration wells offshore Alaska this year, but the threat remains that litigation from environmental groups could derail those plans, he said.

Shell and its partners completed 11 shale gas exploration wells in China last year and hopes to drill 22 this year, Henry said. Initial results show that production from Chinese shale gas reservoirs is more difficult and costly than in the U.S., but those costs should fall over time, he said.