NEWS ARCHIVE

Shell a cracker for Pennsylvania

FEW things have got Pennsylvanian industry more excited recently than Shell's decision to build t...

Shell a cracker for Pennsylvania

Beaver County will host the cracker plant - part of the Anglo-Dutch supermajor's determination to grow its chemicals business, an area that has given Shell a handy buffer as low oil prices have hammered its bottom line and those of its peers.

Up to 6000 jobs will be created in 18 months when construction starts on the facility on the banks of the Ohio River in Potter Township, about 48km north-west of Pittsburgh.

Once known as "Steel City" due to its proud manufacturing industry, Pittsburgh has done well supporting Pennsylvania's coal sector but has now picked up new opportunities in gas.

While companies like North Pier Energy are looking at the pure methane produced from the shale gas for small-scale LNG opportunities, Shell's decision will find new opportunities for by-products like ethane.

Shell's decision could even have a positive impact for the gas drillers who have had to cap and suspend many of the 65,000 wells they've drilled in Pennsylvania alone between 2007 and 2014 because environmental concerns continue to dog the go-ahead for pipelines, leaving gas prices low and few opportunities to commercialise the gas.

"While Shell's cracker plant won't have a direct effect [on his project], indirectly it will have a big impact, because the natural gas produced in western Pennsylvania has so many liquids including ethane, propane, butane, and the more market there is for those liquids the more gas will come out of the ground," North Pier president John Elliott told Energy News.

North Pier will also have the opportunity to sell those liquids from the gas that comes in from the pipeline its midstream partner EmKey Energy owns to downstream players for use in the plastics industry.

The wet gas produced from the Marcellus and Utica shales in western Pennsylvania means counties are looking at collaborating rather than competing so everyone benefits by finding uses for these natural gas liquids.

Jefferson County alone has Ishman Plastic & Wood Cutting and Berry Plastics, along with manufacturers that use plastics such as Victory and Beverage Air Corporation.

"That industry serves a multitude of different types of companies that can all benefit not only from the traditional use of natural gas but the alternatives with the plastics industry and so forth," Jefferson County's director of economic development and planning Brad Lashinsky told Energy News.

"You're talking 6000 jobs just to construct [Shell's cracker plant]. We have contractors from the Pittsburgh region coming into our county and ours going there to do construction, so there will be opportunities there.

"Hopefully, even though we're not sitting in a wet gas area, our plastic companies can somehow capitalise off the cracker plant.

"As long as we work regionally to improve economic impacts, then everybody can have a positive outcome. That's been our key in Jefferson County - we don't just look locally but work with other county, and if something isn't a right fit for us but is for a surrounding county, it benefits all of us.

"As it is, there are workers crossing township and county lines coming home from work. Those workers and families don't care if they have to cross into Jefferson County or cross back into Clearfield County to get to work, they just want to provide for their families."

Chemical production at the new Appalachian plant - the result of more than four years of planning with local officials over the course of two Pennsylvanian administrations - is expected to start early in the next decade.

"The action is not only profound as it relates to an estimated economic impact of $US6 billion or the thousands of jobs that accompany a project of this magnitude, but it is also profound when placed in context of what this means for all of Pennsylvania's industry sectors," a Pennsylvania Commonwealth official told Energy News.

"The new cracker plant in Beaver County will make plastics from gas extracted in Pennsylvania and help attract industries that use these natural gas byproducts for the goods they produce.

"This means that the facility will serve as the centerpiece in the region for the creation of new markets for polyethylene with added potential of attracting additional manufacturing investments that will lead to even more business attraction and job creation for generations to come."

Graham van't Hoff, executive vice president of Shell's global chemicals business, said Shell Chemicals recently announcing final investment decisions to expand its alpha olefins production at its Geismar site in Louisiana -and, with its partner CNOOC in China, to add a world-scale ethylene cracker with derivative units to its existing complex there - demonstrated the growth of Shell in chemicals and would strengthen its competitive advantage.

TOPICS:

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

editions

ENB CCS Report 2024

ENB’s CCS Report 2024 finds that CCS could be the much-needed magic bullet for Australia’s decarbonisation drive

editions

ENB Cost Report 2023

ENB’s latest Cost Report findings provide optimism as investments in oil and gas, as well as new energy rise.

editions

ENB Future of Energy Report 2023

ENB’s inaugural Future of Energy Report details the industry outlook on the medium-to-long-term future for the sector in the Asia Pacific region.

editions

ENB Cost Report 2021

This industry-wide report aims to understand current cost levels across the energy industry