Shell Petrochemical Complex (“Cracker”) is a Game Changer in PA!
In June 2016, Shell announced their decision to build the ethane cracker plant and petrochemical complex in Beaver County, PA. This announcement has been referred to as a “game changer” by Governor Wolf, and is viewed as a significant economic development catalyst for Pennsylvania. This article is a summary of a more comprehensive white paper that can be found at: http://www.sgicc.org/uploads/8/4/3/1/8431164/shell_petrochemical_complex__and_ngls_paper_september_2016.pdf.
The Shell Cracker, located in the heart of the Marcellus/Utica, is the first step in the buildout of an entire petrochemical industry in the region surrounding where the natural gas liquids (NGLs) are being produced. But it is important to note that a much broader geographic region that includes significant portions of the Northeastern and Upper Midwestern U.S. will benefit from the buildout of this petrochemical industry. Three additional cracker plants have been proposed in the region, and the Shell cracker is not likely to be the only regional cracker.
The Shell website refers to the Beaver County project as the “Shell Appalachian Petrochemical Project”, noting it is the first major U.S. project of its type to be built outside the Gulf Coast region in 20 years. They conclude that locating the facility close to both supply and markets will reduce economic and environmental transportation costs and provide regional plastic manufacturers with more flexibility, shorter supply chains and enhanced supply dependability. The complex will include an ethane cracker (average annual capacity of 3.2 billion pounds of ethylene), and three polyethylene units (annual production of 3.5 billion total pounds). Shell will also operate a 250 MW power and steam generation plant on the site, as well as cooling water and water treatment systems, an emergency flare, plus storage buildings and warehouses. 1
The Shell Cracker is what is referred to as a “World Scale” petrochemical plant. The budget for building the entire Complex is projected to be $6 billion, projected to be operational in early 2021. The complex itself will provide an estimated 600 full time jobs when operational, and an estimated 6,000 construction jobs at peak construction.
Based on the volumes of economically recoverable NGLs the region, along with the level of interest multiple major petrochemical industry companies have shown in investigating additional cracker plants in the region, it would appear that the Shell announcement is just a first in a series of projects to be announced. Thus it is important for regional planners and the existing industries in the region to understand what the possibilities are, and to develop strategic plans to maximize the opportunities that will present themselves.
Uday Turaga, President of ADI Analytics, a boutique consulting and advisory firm that focuses on the oil and gas, energy, and chemicals sectors, provided the following comments regarding the exciting opportunities the Shell Cracker brings to the state:
- “Polyethylene (PE) production spawns a wide range of large (PE derivatives manufacturing) and small businesses (PE processing, e.g., blow mold processing) that will drive employment in a more sustainable manner…. It is important to emphasize that it will create both small and large businesses driving a big economic resurgence.”
- “Several other industries will expand or come in the vicinity, e.g., fabrication shops, equipment (pump/compressor) service centers, industrial cleaning and waste management facilities, etc.”
- “It will lay the basis for the development of a new industrial logistics and transportation system on the East Coast, and make further cracker or petrochemical plant additions / expansions much cheaper and easier.”
- “Finally, the plant will train a new generation of workers, create opportunities for entrepreneurs, and drive research dollars in the neighborhood.”
These are truly exciting times in the state! A manufacturing renaissance has been launched as a result of this opportunity, with certainly the opportunity for existing and new companies to benefit in the northwestern sector of the state which has a history of plastics manufacturing.