Shell Takes Advantage of Cheap US Ethane
Anglo-Dutch major Shell has taken the final investment decision to build a major petrochemical complex in Pennsylvania, the heartland of cheap US shale gas, it said June 7.
Shell CEO Ben van Beurden said June 7 that the company was treating petrochemicals as a growth opportunity, and the way to secure an advantage in that sector was through cheap gas.
The plant will consist of an ethylene cracker with polyethylene derivatives unit and building is expected to start in about 18 months, with commercial production expected to begin early in the next decade.
The complex will use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce 1.6mn metric tons of polyethylene/year.
Artist's impression of the plant (Credit: Shell)
Van Beurden said there was limited optionality for gas producers in the region, where ethane is a by-product, and therefore they were distressed sellers. "It is right in the middle of the polyethylene demand centre," he said. The netbacks would be higher for them than shipping it to the Gulf Coast for use in the petchems plants there, he said. Further, the government of Pennsylvania had granted favourable terms, ensuring a very advantageous investment which would produce an “unbelievably robust investment.” Building it will create 6,000 jobs and once it is built, there will be 600 permanent jobs.
He also said that petchems as an industry was carbon negative: carbon was used in materials that insulated, and so improved energy efficiency. The world will need more petchems in order to meet its climate-change goals, which means reducing carbon emissions.
Van Beurden was speaking at the start of a strategy day, roughly a 100 days since it completed its acquisition of BG. The company unveiled its goal of knocking ExxonMobil off the top spot as the major that produced the best returns for its shareholders.
Europe-based petrochemical producer Ineos announced in March that it had received delivery of the first ever shipment of US shale ethane to Europe at its plant at Rafnes in Norway. This autumn it is due to start receiving US shale ethane at its Scottish plant at Grangemouth too.
William Powell