Petrochemical Investments ‘Will Transform the Region’

Growing natural gas production from the Marcellus Shale and key investment decisions by international firms are fueling a transformative drive to develop a new petrochemical manufacturing industry in the region, Bloomberg reported this week.

The multibillion-dollar ethane plant that Shell is building in Beaver County – the largest investment in Pennsylvania since World War II – is just the beginning of a generational manufacturing opportunity tied to affordable and abundant natural gas resources, Bloomberg reported after talking with several industry leaders, including MSC’s Dave Spigelmyer.

I think it’s fair to say there are investments being made today that will transform the region,” Spigelmyer told Bloomberg, which noted that growth in manufacturing petrochemicals from natural gas liquids could offset the impact of the region’s diminished steelmaking industry.

In addition to the Shell plant, Thai energy firm PTT Global Chemical is considering building another ethane plant in Belmont County, Ohio, and potential ethane storage projects are under review in Ohio and West Virginia.

Huge increases in both production and infrastructure make the opportunity possible. Notably, Bloomberg reported, since 2010:

  • Natural gas production in Appalachia grew from about 2 billion cubic feet per day to an estimated 26 billion cubic feet a day.
  • Gas processing plant capacity in the region increased from 1.1 billion to 10 billion cubic feet per day in 2016.
  • Regional fractionation capacity jumped from 41,000 barrels a day to nearly 850,000 barrels daily, and is predicted to reach 1.1 million barrels a day in 2019.

Companies also are attracted by the region’s proximity to markets, and “economics favor local use” of ethane, Bloomberg reports. “About 70 percent of the primary plastics manufacturing plants in the U.S. are within a seven-hour drive of Pittsburgh, according to Spigelmyer.”

Further infrastructure development, including pipelines and underground storage for natural gas liquids, could help cement the region’s status as a petrochemical center and gas liquids trading hub.

But as Spigelmyer told the news service, seizing all these opportunities requires state policies that don’t discourage investment. Higher taxes and limits of development could result in lost opportunities.

Instead, as the County Commissioners Association of Pennsylvania said in outlining its priorities for 2018, maintaining a tax structure that directly benefits communities allows local governments to invest in critical projects and “plan for the future, saving funds for larger projects or with an eye toward economic diversity.”

Spiglemyer echoed that sentiment in a recent column in PennLive co-signed by Pa. Chamber of Business & Industry CEO Gene Barr and Pa. Manufacturers’ Association President David Taylor. As they wrote:

“Establishing the right mix of taxes and regulations will play a major role in strengthening our competitiveness… We know there’s broad support and common ground to be found for strengthening Pennsylvania’s business climate. Let’s make 2018 the year where we enact policies that embrace our energy resources to fully realize the long-term economic opportunities ahead.”

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