Shell Appalachia Project to Include 1.6 Million t of PE

08.06.2016 -

Shell Chemicals has finally made the decision to build a major shale-gas to petrochemicals complex on the banks of the Ohio River in Potter Township, Beaver County, northwest of Pittsburgh. In addition to a cracker, the investment is planned to include a 1.6 billion t/y polyethylene plant.

The decision ends five years of speculation at the Anglo-Dutch company about potential oversupply in the markets and comes at a time when other companies are pulling the plug for now on potential US petrochemical investment.

BASF this week said it would delay plans for a 475,000 t/y US methane-to propylene plant in Freeport, Texas, USA, and Ascend Performance Materials last week confirmed it had postponed once again plans to build a propane dehydrogenation plant at its Chocolate Bayou campus in Alvin, Texas.

Construction on the Pennsylvania complex will begin in around 18 months on the site of a former zinc factory, the company’s Shell Chemical Appalachia subsidiary said, with commercial production due to begin sometime after 2020. Feedstock for PE, low-cost ethane, will come from shale gas producers in the Marcellus and Utica basins.

Because of its close proximity to gas feedstock, the complex and its customers will benefit from shorter and more dependable supply chains, compared to supply from the Gulf Coast, Shell said. It added that “the location is also ideal because more than 70% of North American polyethylene customers are within a 700-mile radius of Pittsburgh.”

An expected 600 permanent employees will work at the Pennsylvania complex. The neighboring states of Ohio and West Virginia had also vied for the investment, but reports said the final decision was swayed in favor of Pennsylvania because of the tax incentives offered. The site also is close to Shell's leased and owned Marcellus Shale land.

Graham van’t Hoff, executive vice president for Royal Dutch Shell’s global Chemicals business, said the third investment announced this year “demonstrates the growth of Shell in chemicals and strengthens our competitive advantage.”

The executive pointed to the recently announced final plans to expand alpha olefins production at Geismar, Louisiana, USA, and add a world-scale ethylene cracker with derivative units to an existing complex at operated with 50:50 joint venture partner CNOOC at Huizhou in China’s Guangdong Province.

Following its acquisition of the BG Group, Shell has said it will limit spending and exit 10 countries in order to focus on the most profitable operations such as liquefied natural gas (LNG), deepwater oil production and chemicals.