Shell Plans Investments in Petrochemicals Division

YOUNGSTOWN, Ohio – Royal Dutch Shell PLC says it plans to make additional investments in its downstream and petrochemicals division this year, a decision that may bode well for its efforts to build a multibillion-dollar cracker plant near Monaca, Pa.

During a conference call with analysts, Netherlands-based Shell CEO Ben van Buerden said that depending “a little bit” on the company’s investment decisions related to projects such as the Monaca plant, “You will see a step-up spend in the downstream, predominantly really in petrochemicals.”

This business segment would include the Pennsylvania project, but Shell has not made a final decision on whether to invest the more than $3 billion it would take to build such a plant – the first of its kind in this part of the country.

While the energy giant cancelled billions of dollars worth of other projects last year involving deep-water exploration, heavy oil, and conventional oil and gas, the Monaca cracker still remains on the books as a potential project. Still, the corporation also announced it would eliminate 10,000 positions worldwide because of the devastating slump in oil prices last year.

“A little growth in the downstream, in my mind, is the sensible thing to do,” the CEO said when questioned by an analyst. “Now we have a few opportunities to invest in very advantaged projects. They are predominately in petrochemicals. You mentioned one- the Pennsylvania cracker – there’s also another one we’re working on, which is the expansion of the non-high complex in Quanto.”

This year, Shell indicated that it would spend about $7 billion on its downstream business this year, while historically it spends about $5 billion, one analyst noted.

A chart in the investors presentation posted on Shell’s website shows that the corporation is deferring its decision regarding the Monaca cracker – so named Pennsylvania Chemicals — with an arrow pointing to sometime early this year.

In November 2014, Shell purchased a 340-acre site along the Ohio River that once housed the Horsehead Zinc manufacturing complex. Even before the purchase, contractors had begun demolition there, and several contractors are on site performing staging work that would support a large construction project.

The site is in Beaver County, Pa. and 40 miles southeast of Mahoning County. Should the project be approved, it would mean hundreds of permanent jobs and possibly 10,000 building trades jobs over the course of its construction, which could take six years or more.

According to the blog “Marcellus Drilling News,” Shell land men have approached those living near the plant seeking rights-of-way through their properties. The leases would accommodate potential pipelines running south to a processing plant in Houston, Pa., and west to another one near Cadiz, Ohio.

If built, the plant would consume natural gas produced from ethane processors that collect natural gas from wells in the Marcellus and Utica shale plays. The plant then “cracks” these ethane molecules to form ethylene and polyethylene and would then produce ethylene pellets used in the petrochemicals industry to create materials used to manufacture countless different plastics products.

The cracker would process 105,000 barrels of ethane per day, and Shell has announced that it has contracted with at least 10 regional producers of ethane to support the project.

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