Shell’s Pennsylvania cracker and polyethylene project to see completion in 2022 after Covid-19 delays

Covid-19 slowed down the construction of the Beaver County, Pennsylvania project that is fully owned by Shell and which includes a 1.6 million tonnes/year polyethylene plant, a cracker as well as pipelines to bring feedstock from shale formations in the region.

Shell's ethylene, polyethylene complex under construction in Pennsylvania. Image courtesy of M.M.

Shell had in mid-February nearly all the regular workers back at work in the construction site of its planned ethylene-polyethylene complex in Pennsylvania as it carried on through a pandemic that hit when construction was about two-thirds advanced.

“It will be probably impossible to catch up the delays that we've had, but nevertheless, I think it is going very, very well at the moment,” Shell’s Chief Executive Ben Van Beurden said on Feb. 4 during an earnings call.

“And the timeline, think of 2022,” Beurden said, according to a transcript of the fourth quarter earnings call by Motley Fool.

Shell had not previously disclosed a timeline other than saying the complex would be completed early in the 2020s. It has also not disclose a price tag, which analysts estimated at the start of the project at anywhere from $6 billion to $10 billion.

The new pellets production will compete for markets in a large the large manufacturing base in the Northeast and Midwest, which Shell identified as the biggest pellet market in North America all within 700 miles from the plant. Shell expects to have a competitive advantage based on that geographical proximity as the area now gets most pellets by rail from the Gulf Coast.

Product “dislocation” in the North American market is likely to occur when the company starts up, a chief executive of a leading North American polyethylene producer separately said in late January.

Project delays

The project “in Pennsylvania, of course, has had its challenges last year. But there, we are back to almost full complement on site,” Van Beurden said on Feb. 4.

Bhavesh Patel, Chief Executive of Lyondell Basell, said during a fourth quarter 2020 earnings discussion on Jan 29 that once the Shell project is completed it will certainly result in “temporary dislocation” in North American polymers markets.

“They'll have to, they'll find their way into the market,” Patel said, according to a Motley Fool transcript.

“But eventually, as long as kind of the overall demand is such that the supply is needed, it tends to find its way to where demand is. So I don't expect a massive disruption, but I would imagine we'll see some bumps when they do start up,” Patel added.

About half of the U.S. polyethylene production is exported, according to market experts. Most exports leave from the U.S. Gulf Coast.

Working through Covid-19

“Construction is about 70% complete and we remain on track to become operational sometime in the early 2020s,” company spokesman Curtis Smith said in an email on Feb. 18.

That percentage advance is the same that was reported By Shell Polymers on Nov. 11. At the time, Hillary Mercer, vice president of Pennsylvania Chemicals and Shell Polymers, also said the plant was “about 70% complete,” according to information on Shell’s website.

Managing the project through the pandemic was a challenge, she said. “We had to convince ourselves that we could keep a workforce of 6,000-plus people working consistently through this Covid epidemic before we could even start to think about how that would look in terms of our overall schedule,” Mercer said.

Shell Polymers went from bringing down the workforce to around 300 people on-site when Covid-19 first hit back to some 6,700 workers returning in a structured way, she said at the time, according to Shell Polymers website.

A Shell official said in July that efforts to add workers to return to a full workforce were at the time being scaled back up gradually and had reached at the time around 3,700 workers.

Shell and construction contractor Bechtel gradually increased the number of workers at the plant along with intensified efforts to keep social distancing in buses transporting workers to the site, and increasing distancing during lunch times. There were in mid-July 17 cases, an official said at the time.

Cases continue to appear, media reports

After July, the number of workers continued to increase gradually, as well as virus cases. Local media reports show that the number of cases at the construction site have climbed since November, with a spike in early December.

According a Feb. 7 headline by the Beaver County-based online newspaper The Times, recent testing showed there were 86 active cases at the plant.

The Times said on Dec. 17 that there were 78 active cases, down from 97 active cases a week earlier. As many as 101 workers, an increase from 77 on Nov. 24, had tested positive, according to another report in The Times on Dec. 3.

A Nov. 18 report by KDKA-TV said that at the time there were 42 active cases. That report said that since the start of the pandemic 84 workers had recovered from Covid-19 and had returned to work.

By Renzo Pipoli