With the right policies, according to a new report by IHS Markit, the Commonwealth has the opportunity to realize a new wave of job-creating petrochemical manufacturing growth. In fact, the report released this week concludes that Pa. natural gas liquids production could attract four more ethane crackers in addition to Shell’s project in Beaver County and up to $3.7 billion in added investments.

“Pa. is currently only using a limited portion of the available Marcellus and Utica Shale natural gas and NGL in-state,” IHS researchers wrote in Prospects to Enhance Pa.’s Opportunities in Petrochemical Manufacturing. “As such, it must begin taking immediate steps to support a long-term strategy that will maximize in-state economic development—as other U.S. states and regions are also competing for the resources.”

That message of competitiveness – in which states are in a fierce competition for job-creating investment – is one that MSC’s Dave Spigelmyer has emphasized time and again.

“Pa.’s world-class natural gas resource base has the potential, as this report outlines, to fundamentally reshape our near- and long-term manufacturing potential,” Spigelmyer told the Business Times. “To fully realize these generational opportunities however, as the authors point out, Pa. must put in place policies that streamline permitting delays and address other regulatory challenges that we continue to face.”

Among the specific issues the researchers identified that Pa. must address: pipeline constraints, insufficient storage capacity, a short supply of large sites ready for industrial development, and the length of time it takes to get regulatory approvals for infrastructure development. Failure to address these challenges – in addition to tax and regulatory concerns – puts Pa. at a competitive disadvantage.

“Importantly, the report underscores the clear fact that ‘other U.S. states and regions are also competing for’ these job-creating opportunities,” Spigelmyer said.

Key report takeaways:

  • Production growth: In 2015, the natural gas from the Marcellus and Utica Shale plays accounted for a quarter of all natural gas produced in the United States and is expected to account for more than 40% of the nation’s natural gas production by 2030.
  • Local economic benefits: The abundance of natural gas from the Marcellus and Utica Shale plays has resulted in significant economic benefits for Pa. over the past decade.
  • Petrochemical Manufacturing Hub: Between 2026 and 2030, the expected ethane production from the Marcellus and Utica Shale plays will be enough to support up to four additional world-scale ethane steam crackers in the region.

Here’s what they’re saying:

  • Study: Four Crackers Could Come to Region Along With $3.7 Billion in Other Investments: An additional four ethane cracker plants could be built in the Marcellus and Utica shale basins, and the time is now for state officials to devise a strategy that could attract billions of dollars in anticipated investments to Pa., a new study suggests. … If state officials coordinate and implement an effective strategy to attract petrochemical businesses here, it could mean as much as $7 billion in additional investments into such things as pipelines, processing plants and storage facilities, the study said. … The study said the two shale reserves accounted for 25% of all natural gas produced domestically in 2015, a figure that could rise to 40% by 2030. With that much product yet to be cultivated, and with the momentum being felt after Shell’s decision to build a $6 billion cracker in Potter Township, the sky could be the limit for the petrochemicals industry in the region and state, officials said. (Beaver Co. Times, 3/21/17)
  • “Well-Positioned” for Manufacturing Growth: Pa.’s profile in the petrochemical industry has shot up since Shell’s decision. … The report predicted that between $2.7 billion and $3.7 billion in investments would be made in Pa. that involve the use of natural gas liquids. And it confirms economic development and industry officials’ suggestions that beyond the Shell project — and two others in the early stages of development in Ohio and West Virginia — there could be enough natural gas liquids from the Marcellus and Utica shales for up to four more cracker plants beyond the Shell plant. … Pa.’s got enough natural and it’s close enough to two-thirds of the market to position it uniquely to take advantage of the burgeoning petrochemical industry. But IHS said the state needs to be aggressive in building out pipelines and storage for natural gas liquids, as well as getting sites in shape for development. “Pa. is currently only using a limited portion of the available Marcellus and Utica Shale natural gas and NGL in-state,” the report said. “As such, it must begin taking immediate steps to support a long-term strategy that will maximize in-state economic development — as other U.S. states and regions are also competing for the resources.” … “Pa. is uniquely well positioned to tap into an ample and growing supply of low-cost hydrocarbon feedstocks coming from the Marcellus and Utica Shale gas developments,” the report said. That means that southwestern Pa. chemical companies — existing and new ones that come in — will have competitive advantages, including lower shipping and production costs. … If Pa. does not respond, then other states will,” the report concludes. (Business Times, 3/21/17)
  • Study Highlight’s Manufacturing “Downstream Opportunities”: The study, conducted by IHS Markit, shows Marcellus and Utica shale reserves made up 25% of all natural gas produced in the United States in 2015. The company expects that to increase to 40% by 2030. … Shell is building a multibillion-dollar ethane cracker plant in Beaver Co. The plant construction, which will employ about 6,000, is expected to be completed by 2021-22. The plant will create some 600 permanent jobs. The new study points to downstream opportunities for ethane and propane producers as natural gas and liquid natural gas production increases through 2030. … The MSC praised the study’s findings but applied pressure to state legislators to ease the permitting process that delays such projects. “ must put in place policies that streamline permitting delays and address other regulatory challenges that we continue to face,” David Spigelmyer said. (Tribune-Review, 3/21/17)
  • Report: Marcellus, Utica Production Could Support Several Ethane Crackers: Wolf and the Team Pa. Foundation on Tuesday released a report from a comprehensive study conducted by IHS that found that Pa. or the greater Appalachian Basin could support as many as four more ethane cracker plants than the one already green-lighted by Shell Chemical in Beaver County. … Additionally, 40% of the natural gas produced is rich in natural gas liquids, or NGLs, more than 70% of which is ethane and propane. Ethane and propane are two important and high-value NGLs used in basic petrochemical production and plastics manufacturing. … While acknowledging the state’s natural gas resources, MSC’s David Spigelmyer said Pa. has work to do to take advantage of the opportunities presented by the study. (Observer-Reporter, 3/21/17)

Visit the MSC’s blog to learn more about the Beaver County ethane cracker facility that’s strengthening Western Pa.’s economy and workforce.