News Briefs

Shell´s Pennsylvania plant in June 2020 during construction. Image courtesy of MM.

×

Shell´s new 1.6-million-tonnes Pennsylvania polyethylene plant starts operations

Shell Chemical Appalachia, a Shell subsidiary, said on Nov. 15 that “it has commenced operations” of its plastic resin project in Pennsylvania with 1.6-million-tonnes-per-year of polyethylene capacity and with full running rates on schedule for the second half of 2023.

“Building this world-class facility is a fantastic achievement and one the team can be proud of. it’s a showcase of Shell’s project delivery expertise,” said Huibert Vigeveno, Shell´s downstream director. The plant is within a 30-mile driving distance from Pittsburgh.

The plant is the first large scale plastic resin project in the Northeast based on ethane from shale deposits in that region, plentiful thanks to the nearby Utica and Marcellus basins.

Shell has said that its location, within a 700-mile radius of 70% of the U.S. polyethylene market, may provide a geographic market advantage. Currently most resin production, based in the U.S. Gulf Coast, is shipped by rail north to serve plastic converters in that region.

No information on costs

Shell started construction in April 2017 of the complex where ethane is turned into ethylene and then polymerized into the polyethylene plastic resin commonly seen shaped as supermarket bags or shampoo containers.

The statement said that the plant “is the first major polyethylene manufacturing complex in the Northeastern United States.”

The statement did not provide information as to the final construction cost.

Around 2019, some sources had estimated it could be anywhere from $6 billion to nearly $10 billion, when considering all related pipeline work.

While it is true that in recent decades most new large plastic resin manufacturing capacity in the U.S. has been built in the U.S. Gulf Coast, the world´s petrochemical industry originated in the Northeast.

The world's first petrochemical operation was established in 1920 in Clendenin, West Virginia and one of its products was precisely polyethylene. The Union Carbide plant production included ethylene, oxide-glycol, alcohols, and olefins.

Another project in the region that has been considered for several years, still lacking a final investment decision (FID) is owned by Thailand´s PTTGC and located in Ohio. 

The eastern Ohio project is similar in that it plans to tap plentiful shale resources in that region of the country to produce polyethylene.

The PTTGC plant would be located on the border with Pennsylvania, up the Ohio river from Beaver County, Pennsylvania, where the Shell plant is located.

Some market sources had speculated that the completion of work by Shell could free up a workforce already experienced in building a cracker and a polymerization plant, potentially for PTTGC´s project as well.

Shell completed the construction in early Aug. 2022.

U.S. refiners say working on new capacity

U.S. companies grouped under the American Fuel and Petrochemical Manufacturers Association said in a Nov. 15, 2022 statement that there are plans to add capacity to alleviate tightness that contributed to relatively high fuel prices in 2022, as well as create more energy security.

“Planned refinery builds and expansion projects already underway will replace capacity lost during the pandemic. But those projects will take time to come online,” a statement said. And even with expansions underway completed, parts of the U.S. may continue to see tightness, it added.

“In the U.S. Gulf Coast region, there are some refinery expansions underway that will add close to 350,000 barrels of daily capacity. Because of the location of these projects, however, the U.S. Northeast and West Coast will still experience the same challenges in finding economic ways to secure and transport fuel products to meet regional demand,” the statement said.

The association took the opportunity to ask for policies favorable to pipeline construction.

“A strategy to improve transportation policies and promote and expand U.S. pipeline projects and other competitively priced infrastructure would better position these regions and the consumers who live there,” the association said.

There is a need for added distillate capacity that refiners would like to meet. “Diesel inventories in the U.S. and around the world are low and there is growing concern about what tight supplies could mean heading into a cold winter,” the statement added.

The organization traces its roots to 1902, when the National Petroleum Association was founded to represent oil refiners in Pennsylvania (where the U.S. first drilled crude oil well was completed) and Ohio.

After alliances with other regional associations the guild became in 1998 the National Petrochemical and Refiners Association, changing to its current name in 2012.

U.S. fuel producers have enjoyed wider margins in 2022 following capacity reductions since the Covid-19 pandemic.

The U.S. refining capacity added up to 17.9 million barrels per day as of Jan. 1, 2022, a 1% on-year drop. It was the second year in a row that refining capacity declined, the U.S. Energy Information Administration said in a June 2022 report.

Argentina´s Pampa Energia enjoys higher petrochemical prices

Pampa Energia, a participant in Argentina's electricity and gas business including downstream, said on Nov. 7 that higher petrochemical prices helped its third-quarter 2022 revenue.

The company reported a “17% year-on-year increase in sales, recording $507 million in the third quarter 2022, explained by natural gas peak seasonality and higher prices in petrochemical (…)”

“Outstanding operating performance in natural gas and oil production (+20% and +14% year-on-year, respectively)” helped too, it said.

Pampa reported a year-on-year decrease in the volume of petrochemicals sold to 120,000 tonnes. However, the average price increased 34% to $1,496 per tonne, the company said.

Pampa Energia sold in 2021 a total of 57,000 tonnes of styrene, propylene and ethylene as well as 49,000 tonnes of synthetic rubber and 58,000 tonnes of polystyrene.

The company, based in Buenos Aires and led by CEO Gustavo Mariani, is owned by an Argentina-based investment fund.

By Reuters Events Downstream