Resurgence: How a Natural Gas Liquid Could Transform the Local Economy

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September 29, 2017

For anyone who has been following the years-long story of the Shell Cracker Plant that is now being built in Beaver County, Pennsylvania – ethane has likely become a more familiar term.  Indeed, it is the ethane-rich natural gas found in the Marcellus and Utica Shales that brought Shell to Beaver County – and those same natural gas liquids have the potential to kick off a new manufacturing chapter for our region.  On top of the billions of dollars the natural gas industry has already pumped into the local economy, ethane could bring more jobs and opportunities to the Keystone State.  A recent study conducted by IHS Markit has found that the greater Appalachian Basin has the capacity to support as many as four additional ethane cracker plants; with a forecast of $2.7 to 3.7 billion in investments in natural gas liquid assets.  The realization of this possibility would turn southwestern Pennsylvania into a world class petrochemical manufacturing hub. 

Ironically, it wasn't all that long ago that the ethane in the regional natural gas stream that was seen as a “problem” for Marcellus Shale producers. Ethane must be removed in order for the resultant gas to meet pipeline quality specifications.  And, unlike the Gulf Coast, where chemical companies readily seek natural gas liquids and have the necessary infrastructure in place to process ethane, Pennsylvania had to adapt. There were no real large-scale options to utilize the ethane here in the region.  

But a team from Marcellus Shale pioneer Range Resources saw the ethane “problem” as an opportunity.  

"There's one thing to do with ethane," explains Range Resources Senior Vice President, Chad Stephens.  And that one thing you can do is a critical component of modern living. “Ethane is a building block for all plastics."

But without regional demand, Range had to get creative. The company entered into partnerships with like-minded businesses, and projects like the Mariner East pipeline are now infusing billions of dollars into Pennsylvania's economy while transporting natural gas liquids across the state to be sold or exported across the globe.  And now, the processing infrastructure that didn't exist years ago in southwestern PA, is starting to come online. 

Cracker plants, like the one Shell is building right now, convert ethane into a chemical called ethylene.  They do this by literally “cracking” the ethane molecule with a super-heating process that results in a new molecule: ethylene – and from that – polyethylene, the plastic found in food containers, milk jugs, garbage cans, storage bins, toys, packaging, and more – much more.  

Here in southwestern PA, it is estimated that the Shell facility near Pittsburgh will use ethane produced from the Marcellus and Utica shales to make 1.6 million tons of polyethylene a year.  And Shell representatives have stated that "more than 70 percent of North American polyethylene customers are within a 700-mile radius of Pittsburgh” – creating a significant advantage for this region. 

In Washington County, upgrades to existing plants and the construction of new natural gas processing and storage facilities is also expected to greatly enhance regional capabilities when it comes to processing ethane and other high-value natural gas liquids.  

A Marcellus Shale Coalition report sums up takeaways from the IHS study and the plans for increased focus on natural gas liquids in southwestern Pennsylvania like this: “with the right policies, the Commonwealth has the opportunity to realize a new wave of job-creating petrochemical manufacturing growth.”  That conclusion is supported by the IHS researchers, who indicated in their report that “Pennsylvania is currently only using a limited portion of the available Marcellus and Utica Shale natural gas and NGL in-state. 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.”

This article is written and sponsored by Range Resources.

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