Who Wants to Crack Ethane in WV, PA, and/or OH, and When?

Recent news from the Pittsburgh Tribune-Review provides a significant update to the Ethane Cracker situation:

Shell, which has announced plans to build in Pennsylvania, Ohio or West Virginia, is still “quite a few years away from a potential final investment decision,” Chief Executive Officer Peter Voser said last week at CERAWeek, a Houston conference held by energy research and consulting firm IHS. That timetable isn’t surprising because of the project’s cost and complexity, experts said.

Five companies have announced plans to build chemical plants that help convert ethane to plastic, according to business and trade news reports. Most are destined for the Gulf Coast. A West Virginia businessman has publicly stated interest in building one there, according to news outlets in West Virginia. [Reference is to a former WV Supreme Court Justice, Richard Neely; but we have heard no news from him recently.]

Cheap natural gas and ethane from shale drilling have fueled the growing interest and can support five new U.S. plants, Mark Lashier, an executive vice president at Chevron Phillips, said at CERAWeek, according to Bloomberg News. Each will cost $5 billion to $6 billion and take more than a decade to build, he said. Chevron Phillips is a chemical producer jointly owned by Chevron Corp. and ConocoPhillips.

Three of the companies, including Shell, have targeted the Appalachian basin. Despite the industry hub on the Gulf Coast, gas from the Marcellus and Utica shales costs so little to produce and is so rich in ethane and similar chemicals that it makes sense to build at least one cracker here, said Kent Moors, Scholar in Residence at Duquesne University’s Institute for Energy and the Environment.

Moors said Shell has invested so much — not just in drilling, but in pipelines and other projects — that, to maximize its investment and control its revenues, it makes sense to invest in processing, too. If Shell doesn’t build a cracker plant, it probably would have to end up selling its shale gas land holdings, he said.

 ”It’s a large investment, but let’s face it, if they don’t do it, they’re out of business. So they’ve got to build it somewhere,” Moors said. “It makes sense for them to build it closer to the location of the actual raw material. … I’d be shocked if we don’t end up with one here.”

 

Tagged as: chemical products, cracker plant, ethane, marcellus shale, methane, natural gas, Utica Shale, wet gas