Region Could Support 4 More Cracker Plants: Study

YOUNGSTOWN, Ohio – A new study says that by 2030 Pennsylvania is capable of producing enough ethane to support four more cracker complexes in the Marcellus and Utica shale region – and that’s excluding Royal Dutch Shell’s $6 billion cracker project under construction in Monaca, Pa.

The report, “Prospects to Enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing,” compiled by IHS Markit, was released Tuesday by Pennsylvania officials during a conference in Houston. Team Pennsylvania Foundation commissioned the study.

Ethane and propane are two common natural gas liquids (NGL) in the Utica and Marcellus shale formations, which encompass most of Pennsylvania, and parts of Ohio, West Virginia and New York. As of today, all of the ethane the horizontal wells here produce is transported via pipelines to cracker plants in the Gulf of Mexico region. There it is converted into polyethylene pellets. This resin is a base ingredient in plastics manufacturing.

IHS Markit’s study postulates that by 2030, Pennsylvania wells are likely to produce enough ethane to supply a total of five cracker plants with enough leftover to ship to the Gulf.

This would provide a resource for plastics manufacturers that would benefit from lower freight costs should they locate near these ethane crackers, the study said. Plus, the analysis found that 73% of market demand in the United States and Canada for polyethylene lies within a 700-mile radius of southwestern Pennsylvania.

“New regional petrochemical producers will be well-positioned to compete for a respectable share of this domestic demand because of a shorter supply chain, the authors write. “Additionally, petrochemical producers operating in the region will also be in a strong positions to take advantage of export opportunities as well.”

Among the challenges that must be addressed immediately, the IHS report emphasizes, is the accelerated development of an NGL pipeline and storage network. Other states, the study noted, are also competing for these production and manufacturing operations.

“These actions are critical to ensuring that Pennsylvania is positioned to develop long-term, job-creating manufacturing opportunities,” the IHS report concluded.

Copyright 2024 The Business Journal, Youngstown, Ohio.