After first acquiring an option agreement in 2012 for a 340-acre site, and then purchasing the site in 2014, Shell Chemical Appalachia has officially announced that it will build a multi-billion dollar ethane cracker plant on the site of the former Horsehead zinc smelter in Beaver County, Pennsylvania. The site will consist of the cracker, two units that will convert ethylene into polyethylene pellets, a natural gas-fired power plant, a loading dock, and a wastewater plant. It is estimated that constructing the plant will employ approximately 6,000 workers. Thereafter, the plant will permanently employ about 600 workers. The plant is expected to consume approximately 105,000 barrels of ethane per day and Shell has reportedly secured supplier commitments from at least 10 oil and gas operators in the region. Primary construction on the site is expected to start in approximately 18 months.
Horsehead Holding Corp. (Horsehead) announced Monday that it closed on the sale of its former zinc smelter to Shell Chemical (Shell), which is the proposed site for an ethane cracker plant in Beaver County. Although Shell has not made a final decision on whether to build the cracker plant, it has been considering the Horsehead property as a site for the plant, which would convert ethane, a component of natural gas, into polyethylene. Shell is moving forward with developing the site, having demolished the smelter plant and relocated power lines. Shell indicated that this is a necessary step in the plans to acquire permits and continue development of the site.
According to the Tribune Review, Reliance Industries, an Indian conglomerate with ties to the Marcellus Shale, plans to ship 1.5 million tons of ethane annually from the United States. Reliance has invested with Carrizo Oil and Gas Inc. and Chevron in the region, but the company’s spokesperson did not identify which shale sources will provide the ethane for shipment. According to the report, the announcement has sparked interest and potential competition for supplies with plants under consideration in the region.
As Reported by MetroNews on March 26, the proposed Wood County, West Virginia, petrochemical “Cracker” plant project, called Project Ascent, took a significant step forward on Wednesday with an announcement from Antero Resources that it would contribute 30,000 barrels of ethane per day to the proposed plant, which represents approximately one half of the ethane needed to operate the plant. The proposed Cracker plant will use ethane to manufacture polyethylene, which is used to making various plastics. Further information on the agreement between Antero and Ascent is expected to be announced on Wednesday, March 26, at the West Virginia Manufacturers Association’s Marcellus to Manufacturing Ethane Development Conference being held at the Charleston Civic Center in Charleston, West Virginia.
The Pittsburgh Business Times reports that the Beaver County Board of Commissioners and representatives from Royal Dutch Shell met to discuss the next planning steps for the proposed cracker plant in Beaver County, Pennsylvania. Although the meeting did not result in a final decision as to whether the company will build the plant, the commissioners and representatives discussed relocating a portion of a highway, power lines, a rail line and developing a dock. Shell began demolition activities at the former Horsehead site in February. It has also begun to secure feedstock supply for the plant by securing agreements with CNX Gas Co. LLC, Hilcorp Energy Co., Noble Energy Inc. and Seneca Resources Corp.
As reported in the Pittsburgh Business Times, the proposed ethane cracker plant near Parkersburg, West Virginia, could potentially have a multi-billion dollar positive effect on the state’s economy. Emeritus Professor of Economics Tom S. Witt of West Virginia University authored a report, entitled “Building Value from Shale Gas: The Promise of Expanding Petrochemicals in West Virginia,” wherein he analyzed the short and long term impact of the proposed facility on West Virginia’s economy. Based upon the conclusions of Professor Witt’s report, the construction and operation of the proposed ethane cracker plant could generate a total of 19,710 jobs, representing employee compensation of $1.047 Billion and total economic output of $2.261 Billion. Professor Witt, in his report and in an interview with the Charleston Daily Mail, gives specific policy and legislative recommendations for West Virginia to successfully attract large scale projects, such as the ethane cracker.
West Virginia’s Ohio River region is one step closer to seeing construction begin on a cracker plant in the Wood County area. According to the Charleston Gazette, Appalachian Shale Cracker Enterprise, owned by Brazilian based Odebrecht, purchased the SABIC Plastics Innovations facility in Wood County for approximately $11 million. The “Ascent” complex, once it is complete, will include three polyethylene plants in addition to the ethane cracker plant and associated infrastructure. The SABIC plant is anticipated to continue operations until 2015 making the timeline for constructing and opening the ethane cracker facility unknown.
The Pittsburgh Post-Gazette recently reported that Horsehead Corp. and Shell Chemical LP have extended their land option agreement for a third time, giving Shell more time to decide whether it will build an ethane cracker on the site of Horsehead’s Beaver County Pennsylvania smelter. Unlike the previous two extensions, the expiration date of the third extension is confidential. The third extension also includes a provision that Horsehead will soon begin demolition activities at the site and that Shell will cover the expenses. Horsehead and Shell first entered into a land option agreement in March 2012.
The Pittsburgh Post-Gazette reports that Shell Chemical, a division of Royal Dutch Shell, has begun to solicit ethane commitments from Marcellus Shale operators for its proposed Beaver County, Pennsylvania cracker plant. The company has already secured commitments from CONSOL Energy Inc., Noble Energy Inc., Seneca Resources Corp. and Hilcorp Energy Co. Shell has indicated that the response from bidders will help to determine whether it will build the first world-scale cracker plant in the Marcellus region. The bidding period will last two months.
The Beaver County Commissioners have approved the creation of a 325-acre tax-exempt zone aimed at enticing Shell to proceed with the construction of an ethane cracker plant in the region. According to one commissioner, “It’s an important piece of the puzzle, but it still doesn’t guarantee a final decision.” Not only would Shell be exempt from property taxes, but also, its earned income, net profits, business privilege, and mercantile taxes would be abated. Read more here.
James Cutler, CEO of Houston-based Appalachian Resins, Inc., indicated to the State Journal that his company is preparing to announce the details of its planned $500 million integrated polyethylene facility in Marshall County, south of Wheeling. Funding for the project has appeared to come together, reports the State Journal. The plant will include an ethane cracker that would consume 15,000 barrels of ethane per day. Ethane is produced with the “wet gas” found in the Marcellus Shale formation in northern West Virginia, Southwestern Pennsylvania and Ohio. The plant’s cracker will produce ethylene, and the facility will ultimately produce polyethylene resins, such as HDPE. The plant is projected to produce upwards of 120 permanent jobs.
At a recent press conference, West Virginia Governor Earl Ray Tomblin was reportedly confident that an ethane cracker will be built in West Virginia “in the future.” Stating only that the Commerce Department “continues to talk with those interested,” Governor Tomblin expressed hope for a potential cracker plant to be located in West Virginia. Although Shell Chemical announced on March 15, 2012 that it would consider a site in Beaver County, Pennsylvania, to build its ethane cracker plant, the Shell deal is not final. Pennsylvania Governor Tom Corbett has already offered Shell a tax credit incentive valued at $1.65 billion over 25 years.
Following a speech at the Marcellus Utica Midstream Conference in Pittsburgh this morning, Pennsylvania Governor Tom Corbett said that Royal Dutch Shell’s recent decision to delay a final commitment to building an ethane cracker plant in Beaver County does not mean that Shell is considering alternate locations for the plant. The Pittsburgh Post-Gazette reports that Gov. Corbett said “[i]f they’re going to build it, they’re going to build it here,” and that the extension can be attributed to “dotting I’s and crossing T’s.”
Marketwatch.com reports that most consumers living in West Virginia believe shale exploration will provide economic opportunity. Of those polled, nearly a quarter already reported seeing economic impact. The poll, conducted as Huntington Bank’s Midwest Economic Index, shows that populations with the most exploration activity, Pennsylvania, Ohio, and West Virginia had the highest expectation for economic opportunity. Huntington Bank predicts that natural gas production, particularly from the Utica and Marcellus Shale formations, will increase dramatically over the next 25 years and that job growth will continue as well. According to the report, Huntington plans to expand its commercial banking services to serve the energy sector to meet new demand in the energy sector.
Royal Dutch Shell plc and Horshead Corp. agreed to a six-month extension for Shell to acquire land for a proposed cracker plant that it is considering building in Beaver County. Shell had a December 31, 2012, deadline to buy the land in Center and Potter Townships, but obtained the extension to allow it more time to assess the project. The Tribune-Review reports that local and state officials remain optimistic that Shell will move forward with the plant. The cracker facility will be used to process ethane produced from the Marcellus and Utica shales, and the plant and associated businesses are projected by some to create up to 8,000 jobs for the local economy.