Shell Chemical’s Appalachian Petrochemical Complex Based on Marcellus Shale Gas Moves Closer to Fruition

Back in 2011, Shell Chemical received strong local support when it announced plans to build an ethylene and derivatives petrochemical complex based on the large quantities of ethane being produced and available from Marcellus Shale natural gas production. At the end of June, Shell received approval from Pennsylvania’s Department of Environmental Protection to proceed with its plan to build the plant in Beaver County on the site of a former zinc smelter. This approval allows the company to proceed with preliminary site development work and continue its project evaluation, which should lead to a final decision later this year.

Image: Shell Global
Image: Shell Global

The complex includes a 1.5 billion pound per year ethylene cracker with downstream polyethylene plants totaling 1.6 billion pounds per year. There will be three separate polyethylene plants; one for low density polyethylene (LDPE), another for high density polyethylene (HDPE) and a third for linear low density polyethylene (LLDPE). Both LDPE and LLDPE are used for food packing, film, trash bags, diapers, toys and housewares, while HDPE is used for stiffer products such as crates, drums, bottles, food containers. Several factors should make this a potentially attractive project. Of all feedstocks that can be used for ethylene production by way of steam cracking technology, ethane offers the highest overall yield to ethylene.

Feedstock Chart

Marcellus shale natural gas is a “rich” gas with particularly high concentrations of ethane (12 – 16%). The 1.5 billion pound per year ethylene plant will require approximately 88,000 barrels per day of ethane. Estimates are that ethane production from Marcellus shale gas could grow to 310,000 b/d by 2019 with ethane pipeline capacity in the region of close to 500,000 b/d. With that in mind, feedstock availability is not a concern. There should also be a logistical advantage over Gulf Coast polyethylene plants since approximately 45% of the plastic processors are located within 500 miles of the plant site. See the figure below from Jim Cutler’s “Ethylene Plants & Shale Gas” webinar presentation on the June 20, 2013 from Penn State University.

Webinar Figure

Shell is not the only company considering an ethane cracker based on Marcellus Shale Gas. Two Brazilian companies, Braskem SA and Odebrecht SA formed the Appalachian Shale Cracker Enterprise (ASCENT) project to be located in Parkersburg, West Virginia.

Pennsylvania Marcellus
Image: Marcullus Shale Coalition

Similar to the Shell project, three downstream polyethylene plants are included as part of the complex. However, ASCENT management is now reconsidering the project as the economic advantage of ethane cracking over naphtha cracking has diminished with the decrease in crude oil prices. (Naphtha prices are directly related to crude oil prices while ethane prices are related to natural gas prices.) Yet a third ethane cracker project is being considered in the Marcellus Shale region. A joint venture of PTT Global Chemical, Thailand’s largest integrated petrochemical and refining company, and Marubeni Corp. have selected a site in Belmont County, Ohio for their complex which will also utilize ethane from the Utica Shale formations. It will be interesting to follow these three Northeast ethylene/polyethylene projects and see if any of them is implemented. Despite their potential advantage in proximity to ethane production, low price natural gas as an energy source to make steam and the many local downstream plastic processors, they will still face stiff competition from the traditional Gulf Coast olefin/polyolefin producers, listed below, many of whom are presently implementing expansions and new additions using ethane as feedstock.

Company Chart

Keep an eye on these interesting projects that are driven by the rapid expansion of unconventional gas resources in the US.

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