Shell keeps option on Pa. ‘cracker’ site
WHEELING – Nearly two years after announcing intentions to bring a multibillion-dollar ethane cracker plant – and the thousands of related jobs– to Monaca, Pa., rather than to Ohio or West Virginia, Royal Dutch Shell is set to demolish structures at the Horsehead Corp. site.
Global oil giant Shell has again extended its option to purchase the 300-acre site along the Ohio River north of Pittsburgh, just as it did last December and again in June. This time, the company plans to pay for demolition and removal of the existing Horsehead zinc plant, with work scheduled to begin early next year.
Shell took this latest step with its cracker project this week.
In the meantime in West Virginia, Odebrecht plans to build an ethane cracker in Washington Bottom in Wood County at the existing Sabic plant. Axiall Corp. hopes to open a $3 billion ethane cracker in 2018 in Louisiana.
Shell also has decided against proceeding with a Louisiana gas-to-liquids project, citing the company’s “strict capital discipline.”
“We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our world-wide portfolio to add value for shareholders,” said Peter Voser, Shell’s chief executive officer.
Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, projects Pennsylvania, Ohio and West Virginia should be able to produce about 500,000 barrels of Marcellus and Utica shale ethane by 2018. Shell, Odebrecht and Axiall are looking to capitalize on these large quantities of ethane by building new multibillion-dollar facilities.
Ethane, along with propane, butane, isobutane and pentane, is one of the natural gas liquids often prevalent in “wet” shale gas, along with the “dry” methane. A cracker plant converts ethane into the widely used ethylene, which can be used in everything from plastics to tires to antifreeze. Because there is still no cracker in the Marcellus or Utica regions, processors must do one of three things with the product: blend it into their regular gas streams; burn it off via flaring; or place it into pipelines for shipping to crackers in Gulf Coast states or in Canada.
For months in 2011 and 2012, officials in Ohio and West Virginia worked to secure Shell’s large petrochemical plant because they said it should generate about 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs. Ohio Gov. John Kasich flew to Houston, Texas, to meet with Shell officials to try to attract the cracker, while West Virginia Gov. Earl Ray Tomblin and Secretary of Commerce Keith Burdette also worked to entice Shell to build in the Mountain State. Reasons officials cited for losing the cracker to Pennsylvania included problems with labor unions, tax structures, railroad connections and access to a direct supply of ethane from Shell’s Keystone State natural gas operations.
For about 18 months following Shell’s Monaca decision, West Virginia officials worked with other companies in hopes they would build a petrochemical plant in the Mountain State. Tomblin’s November announcement of the Odebrecht Parkersburg project followed speculation that a company may be looking at property in Marshall County for such a facility.
Meanwhile, Axiall took over the chemical division of PPG Industries earlier this year, giving the company control of the Natrium chemical production site along W.Va. 2, which formerly operated under the PPG badge.
If successful in building its Louisiana cracker, Axiall could make use of the thousands of barrels of Marcellus and Utica shale ethane scheduled to be shipped south via pipeline.