Monaca Cracker Plant Still 'Under Study,' Exec Cautions
PITTSBURGH – Although a preferred site has been chosen, several hurdles are yet to be overcome before Royal Dutch Shell commits $2 billion toward construction of a new ethane "cracker" plant near Monaca, Pa., a company executive said Tuesday.
"The cracker plant is still under study," Paul Ayoub, manager of the Appalachia Petrochemical Complex project, told a large audience at the Energy Inc. conference at the David L. Lawrence Convention Center. "More must happen before it can become a reality,” he said.
The conference, sponsored by the Pittsburgh Business Times, hosted speakers who represented the energy and chemical industries as well as local, state and federal government officials. Some 800 attended.
Much of the discussions revolved around the economic boost the region could receive should Shell locate the plant near Monaca, in Beaver County, about 40 miles southeast of Youngstown.
The plant would convert ethane gas extracted from the Utica and Marcellus shale in eastern Ohio and western Pennsylvania. Ethane, a "wet" gas, would be converted into ethylene, a product used in the petrochemical industry to produce plastics and other products.
"What we see here is a very interesting idea," Ayoub said. "The gas is produced locally and you're selling to a market" encompassing 500 to 600 miles from the Pittsburgh region.
The location of the plant depends on several other issues, Ayoub said. First, is the concern over environmental issues at the site, which formerly housed the Horsehead Corp. zinc complex. Other concerns involve taxes, costs, production and supply.
"What we're talking about is ensuring that we have an affordable, sustainable supply," he said. "The big question we're looking at is, 'Will the ethane be there, and will it be there for us?'"
But others are confident that Shell, and possibly other large energy companies, are likely to build processing and cracker plants in the region.
The cracker plant would be the largest single investment in Beaver County in more than 50 years, noted Beaver County Commissioner Dennis Nichols.
"The gas reserve here would make us the second-largest in the world," he said, when combining the potential of the Marcellus and Utica shale.
Shell's cracker plant could mean 450 permanent full-time jobs, as well as 10,000 construction jobs, Nichols said. It could also create another 18,000 auxiliary jobs in the region for support and supply operations.
He projected that the $2 billion investment by Shell could leverage another $4 billion to $5 billion in new investment from public and private sources.
DeWitt Peart, president of the Pittsburgh Regional Alliance, expressed confidence that there’s an overwhelming supply of "wet" gas in the region to support several such operations.
"The users are here, the supply is here, the demand is here," he said. "If you produce ethylene near its source, and you sell it near its source, then you drive down costs. And that makes us competitive worldwide."
Peart said the region is so liquids-rich that it's bound to attract more outside investment from other sources. "For us, in this mega-region, we'll see one, possibly two, crackers built within maybe 10 years or 15 years," he said. "But, I think it's inevitable."
The economic impact of a cracker complex could be significant, he said. "For every one job that is created by a facility like Shell is proposing to build, there are 20 indirect or induced jobs created," he said. "There are suppliers to the plants, there are companies that use the ethylene as a feedstock that want to be close to that plant."
That would not only encourage new companies to locate in this region, but spur existing companies to expand, Peart projected.
One drawback of the region, he cautioned, is the lack of available sites suitable for a major project such as Shell's.
"The fact in the three-state area there were only four sites that met their criteria demonstrates that there aren't as many sites as you would think," to accommodate such development.
Shell required at least a 200-acre site, plus rail and river access. "One of the things we need to do as a region is to make sure we stay ahead of the demand," he says. "That goes for southwestern Pennsylvania, that goes for Youngstown, it goes for the panhandle of West Virginia. When you look around, we lack the infrastructure."
Copyright 2012 The Business Journal, Youngstown, Ohio.
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