It has been a while since we put together an update on the Shell ethane cracker plant proposed to be built in Beaver County, PA. However, some recent developments have shown that this major investment proposal continues to move in a positive direction.
(Review: Notes from the last public meeting on the Shell ethane cracker)
The ethane cracker would be able to take advantage of vast resources in the Marcellus shale that lacks midstream infrastructure connection to major markets, refining centers, or industrial consumers. At this time natural gas in the Marcellus shale trades well below the posted Henry Hub price. It’s all there, you just can’t get it to consumers.
Large investments move slow
One thing Shell has been sure to emphasize throughout this long process is that multi-billion dollar investment like this move slow and face many roadblocks. The purchasing of the land is a drop in the bucket and does not ensure in any way that Shell can’t or won’t decide to shelve the project. This same concept applies as they move through the multi-year permitting and public hearing process.
Markets change. Economics change. Priorities change. Politics get in the way.
Positive steps taken
While hardly past the point of no return, Shell has made some positive steps forward which is giving the region hope that this project will be seen through.
Shell Completes Site Purchase – In Nov 2014 Shell exercised their option to purchase the Horsehead property for the proposed ethane cracker plant. While local officials were quick to praise the move, Shell pointed out that owning the property was required to move forward with permitting. Definitely a positive step forward.
Supply Commitments – The ethane cracker will convert natural gas liquids into more profitable chemicals used in plastics and other products. To do this you need a steady stream of feedstock to the plant. This shouldn’t be a problem due to the before-mentioned lack of midstream infrastructure in the area. Shell has obtained supply commitments from 10 producers in the area at the last report.
Moving Roads – Shell could be picking up the majority of the cost for a proposed highway relocation near the building site. This could be a $60-90 million commitment from the company for further site improvements in the area.
Slow and steady
All in all, it seems that things continue to move forward as far as the ethane cracker is concerned. There has been some discussion as to whether proposed changes in the local tax structure would affect the project, but the jury is out.
It is hard to believe that the governor’s office would take any steps to derail investment at this point.
Stay tuned!
Previous Shell Ethane Cracker Articles
Public Meeting Updates Status of Shell Ethane Cracker Development – Oct 2013
Background of Shell’s Proposed Ethane Cracker in Beaver County – March 2013
Shell Ethane Cracker Public Information Meeting – Aug 2012
Doing Business with Shell – Aug 2012
Recent Shell Ethane Cracker News
Pennsylvania DEP Close to Issuing Shell Air Permit for Ethane Cracker – March 2015
Hopes for cracker plant boosted by Shell decision to put property – Nov 2014
Shell’s air permit moves ahead as does feedstock commitments – June 2014
Shell to restructure shale assets in U.S. – March 2014
Shell seeks major Route 18, I-376 changes for proposed plant – Feb 2014
Shell Ethane Cracker Plane Website
Related Article: Upstream vs. Downstream
Read more about the difference between upstream and downstream segments of the oil and gas industry.
