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Why Did Shell Choose PA for its Ethane Cracker Plant?
A great article in Investor’s Business Daily explores the link between shale gas and the “explosive expansion” of the U.S. petrochemical industry. Part of the petchem supply chain is finding a cheap source of ethylene, the raw material used in making all sorts of plastics products. Manufacturers get ethylene from ethane cracker plants. The article discusses that link, and the reasons why Shell chose to locate their new multi-billion dollar ethane cracker plant near Pittsburgh. As you can guess, economics play a major role in such a decision. Here are the specific economics that convinced Shell that PA is a good bet…
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Last week MDN reported that Dennis Davin, Secretary of the Pennsylvania Department of Community and Economic Development (DCED) had gone on a roadshow to three counties that will be most affected by Shell’s ethane cracker plant planned for Beaver County (see 
A banker, a real estate developer and a natural gas drilling company rep walk into a bar… No wait! This isn’t a joke! A banker, a real estate developer and a natgas drilling rep were panelists at seminar held yesterday, organized by the Pittsburgh Business Times. Even though there has been a major slowdown in Marcellus/Utica drilling, all three panelists were upbeat and optimistic–in no small part because of the coming Shell ethane cracker in nearby Beaver County. One comment made about the Shell cracker: “We’re not just building a facility; we’re building an industry.” That’s just how major the Shell project will be in the greater Pittsburgh area. Another comment: “The Marcellus Shale is not in the tank…It has slowed down, which is typical of industries that are sensitive to price cycles, [but] it’s consistent, affordable and is stable.” More interesting tidbits from the PBT soiree…
We suppose we should have known, but we didn’t. We didn’t know that Pennsylvania has a Department of Community and Economic Development (DCED). In fact, the DCED has its own cabinet-level Secretary–Dennis Davin–appointed by Democrat Gov. Tom Wolf in January 2015 when Wolf assumed office. Davin has stayed largely under the radar–until now. Wolf has sent Davin out on a road show to promote the forthcoming Shell ethane cracker plant. Davin is conducting roundtable discussions in various communities around PA to generate ideas on how local businesses can benefit from the cracker. So far he’s visited Beaver County (where the cracker will be built), Lawrence County and Washington County. The DCED is flooding the airways with press releases about Davin’s cracker road show…
All the way back in February MDN brought you exclusive news that Shell had begun approaching landowners in Beaver County to get them to sign easements for two ethane pipelines to feed the mighty cracker plant they plan to build in the county (see 
Yesterday ExxonMobil and Saudi Arabian petrochemical giant SABIC announced they have formed a joint venture partnership and are evaluating (and plan) to build yet another ethane cracker plant complex along the Gulf Coast–in either Texas or Louisiana. The Gulf Coast has numerous such plants already in operation. The northeast has (so far) none. Why the two companies are not looking to the northeast is beyond us. In their announcement the companies said they want to locate along the Gulf Coast “near natural gas feedstock.” Why is this an MDN story? Because (a) pipelines are planned from the Marcellus/Utica region to the Gulf Coast, and this cracker, if built, will be yet another new market for our gas, and (b) because it will likely compete with the crackers that do get built in the northeast. Shell has committed to building one in Pennsylvania, and PTT Global Chemical will make a final investment decision in 2017 on a planned cracker in Ohio. A new Exxon/SABIC cracker will compete for our gas supplies, we have no doubt. Here’s yesterday’s joint announcement…
Although he still wants to tax the Marcellus Shale industry out of his state, Pennsylvania Gov. Tom Wolf (with the dubious title of “most liberal governor in the U.S.,” see 
In May MDN brought you the news that a researcher at West Virginia University believes an natural gas liquids (NGL) storage hub is what the Marcellus/Utica region really needs (see 
We’ve previously reported on a number of LNG (liquefied natural gas) export projects planned for the eastern shore of Canada. There are four to five such projects, depending on how you count them. However, one of those projects–Bear Head LNG in Nova Scotia–seems to have the most momentum. It seems the project has received most (if not all) of the necessary permits it needs to proceed, the most recent one issued just last week (see 
In April 2015 PTT Global announced they had chose a site in Belmont County, OH as the site of for their $5.7 billion ethane cracker complex (see 
Is this the future of engines for large gas-hauling ships? Mitsui Engineering & Shipbuilding Co. announced two weeks ago they have completed the world’s very first ethane-operated two-stroke diesel engine. The engine is one of three the company is building to power three LEG (liquefied ethylene gas) tanker ships for Hartmann Schiffahrt of Germany and Ocean Yield of Norway. The ships are being built in China. Why ethane as fuel? For one thing, it’s cheaper than heavy fuel oil (HFO), the traditional fuel source for ship engines. Plus it burns a whole lot cleaner–something increasingly important with new emissions regulations coming along. But the obvious reason is that a tanker full of ethane can always tap into that ethane as fuel for the ship, should the need arise. The Marcellus/Utica produces ethane in abundance and ethane exports now regularly take place via ship from the Marcus Hook refinery near Philadelphia. Might we one day see an ethane-powered ship hauling ethane leaving Marcus Hook for Norway? Maybe, since some of the Marcus Hook exports to date have gone to Norway (see 
Can a single petrochemical facility, like Shell’s proposed ethane cracker plant in Beaver County, “rebirth” all of Pennsylvania’s moribund manufacturing base? That would be a resounding “Yes!” according to Marcellus Shale Coalition president Dave Spigelmyer and Pennsylvania Manufacturers’ Association president Dave Taylor. Writing a column in the Harrisburg Patriot-News, the two Daves make the case for just how big a hairy deal the coming Shell cracker in PA really is…