Cracker Plant Chatter

January 1, 2017

Just What is the Cracker Plant That Everyone is Talking About?

 

Shell became the first company to approve a major petrochemical complex when it announced it would construct an ethylene cracker with a polyethylene derivatives unit in Beaver County about 30 miles north-west of Pittsburgh. 

 

The Shell Cracker is a first step towards the build-out of a regional petrochemical hub and manufacturing renaissance in the plastics and chemicals sector.  With over 100 plastics manufacturers already here in Pennsylvania that will be able to take advantage of lower feedstock and transportation costs, there will also be opportunities for new business creation and expansion in many sectors that provide support products to the plastics and chemicals sectors such as housewares, food packaging, toys, diapers, trash bags, bottles, tires, footwear, sealants, pantyhose, clothing, carpets and other related products.  

 

Site preparation, road work and rerouting, bridge construction and utility upgrades are ongoing around the primary site in Potter Township.  Construction of the actual $6 billion plant is expected to begin by the fourth quarter of this year and start-up is scheduled for 2022.

 

The main economic drivers of the Shell ethane cracker plant are its location to the ample supply of NGLs/ethane.  The shorter your supply lines the better.    The complex will use ethane from shale gas producers in the Marcellus and Utica basins in the Appalachia region to produce 1.6 million tons of polyethylene per year.  Once built, Shell’s plant will be within 700 miles of 73% of the nation’s polyethylene users, placing them much closer than their competitors.

 

Just What Does A Cracker Plant Do?

 

The Shell cracker will extract natural gas from the Marcellus Shale, and then process ethane, a natural gas liquid, into ethylene.  This process is accomplished through cracking where ethane is heated to a point where it ‘cracks’ into ethylene and then different grades of polyethylene.  The chart below outlines the process of extracting raw natural gas and processing it into ethylene(Alaska Natural Gas Transportation Products):

 

 

Lessons Learned From Louisiana

 

At Westlake in Calcasieu Parish in Louisiana, Sasol is constructing a world-scale petrochemical complex similar to Shell’s project with construction getting underway in 2014.  The project will roughly triple the company’s chemical production capacity in the U.S. and enable it to build on its strong positions in robust and growing chemicals markets.  Despite not being completed yet, Sasol’s project is already delivering tremendous economic impacts to the state.  According to a study commissioned by Sasol, projections of Sasol’s capital expenditures will generate a total of $270 million in revenues for state and local governments during the construction period, of which more than $110 has already been paid.  Sasol is also projected to spend more than $3.5 billion directly in Louisiana during the construction period.  As of June 2016, $2.5 billion has been committed to Louisiana contractors and businesses. 

 

When operations begin in 2019, the project is expected to generate $7.5 million annually in taxes payable to the state.  Local government will collect $6.2 annually. In addition to the Louisiana facilities, Sasol also has facilities in Arizona, Texas and Oil City, PA. (Venango County).  At the Oil City plant, they manufacture the antioxidant BHT, which is used as a stabilizer in fuels, lubricants and other oils, polymers, rubber, printing inks, adhesives, waxes food and food packaging, and animal feed.  High purity meta-cresol is also produced, which is used in the manufacture of resins, antioxidants, agricultural chemicals, pharmaceuticals, color formers, flavor and fragrance chemicals, and other various chemical intermediates.

 

A Look at The Future

 

As Shell builds their world-scale petrochemical complex in Beaver County, they are also building careers, local business opportunities and community connectivity.  The $3.2 billion investment will generate a total of $7.9 billion in additional chemical industry output, bringing the state’s industry revenues to more than $31 billion and will make Pennsylvania the country’s 8th largest chemical producing state.  More than 17,000 permanent jobs will be created in the chemical industry throughout the supply chain in everything from trade and craft jobs to highly-skilled knowledge workers.  More than $1.2 billion in wages will go into the pockets of Pennsylvania workers, generating more than $140 million in state tax revenue and more than $240 million in federal revenue.   

 

The multiplier effect of Shell’s ethane plant goes like this:

 

·       Feeds 200-300 polyethylene plants;

·       Each of these plants create 300 permanent direct jobs and 900 indirect jobs.

 

The Shell Cracker plant is one of 4 cracker plants that is expected to be built in the tri-states region of Ohio, Pennsylvania and West Virginia.

 

Will the Cracker Plant Have an Impact on Western PA?

 

Absolutely!  There is no project that will have as much impact on Western Pennsylvania as Shell’s ethane cracker plant in Beaver County.

 

Cracker Plant Educational Forum

 

Is your organization mobilized and ready for the opportunities?  Don’t get left behind!

 

The Northwest PA Oil & Gas HUB Taskforce is hosting a forum on March 8th at Cross Creek Resort near Titusville entitled the ‘Regional Impact of the Petrochemical / Cracker Plant on Western PA’.  Industry, economic and workforce development leaders from Louisiana will present on their experiences and what they have learned from the Sasol cracker plant.  Leaders from the oil and gas industry in Pennsylvania will also provide updates on progress within that industry and DCED will talk about leveraging Pennsylvania’s energy assets for economic growth. 

 

The cost to attend is $65 per person or with two or more registrations from the same company the price drops to $50.

 

Register at: https://www.regonline.com/builder/site/?eventid=1231510

 

 

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