Northeast petrochemical hub plans draw incentives but also opposition

Supporters of a new petrochemical hub in the Northeast appear just as determined as those opposing it due to environmental concerns.

World's first petrochemical operation in Clendenin, WV. The Union Carbide plant produced ethylene oxide/glycol, alcohols, olefins, and polyethylene. By Roy Henry Brown (1879-1956). Courtesy of Science History Institute, Philadelphia.

The potential for the development of a petrochemical industry in the Northeast of the United States has brought along tax credits and other incentives but also staunch environmental opposition.

Ohio, Pennyslvania and West Virginia officials want to attract companies that would take natural gas liquids from the Marcellus and Utica shale formations to make petrochemicals in an attempt to create jobs and tax revenue.

Environmental groups that fear air pollution or chemical accidents seem equally determined. They want to keep petrochemicals away from this region, home to the world’s first petrochemical plant.

Shell is carrying out the most advanced project in Monaca, Pennsylvania. It is building an ethane cracker and polyethylene (PE) complex that will start service early in the 2020s decade.

Thailand’s PTT Global Chemical has done some site work in Belmont County, Ohio, but has yet to make a final investment decision on a similar cracker and PE complex.

In addition to plants processing ethane, there is also plenty of propane available for potential propane de-hydrogenators and polypropylene plants as well as a large need for storage, pipelines and related infrastructure.

Incentives aim to get Thai company to reach FID

Private non-profit organization JobsOhio will contribute $20 million on top of previous grants to get PTTGC to confirm the investment in this area along the Ohio river valley, The Times Leader reported on Feb. 8, 2020.

The funds will go to Bechtel, which is set to become the contractor in the project if it moves forward, according to The Times Leader, a newspaper in Martins Ferry, a city in Belmont Country that sits along the western bank of the Ohio River.

PTT Global Chemical had considered investment in an ethane cracker and PE plant since 2015. PTTGC already bought land but a final investment decision (FID) remained elusive. The Thai embassy in Washington D.C. said on Feb. 18 that a decision on the FID will be announced in 2020.

In July 2019 JobsOhio awarded PTTGC’s project $30 million for site preparation. PTTGC and its South Korean partner, Daelim, committed at the time $35 million to site works. In 2016 JobsOhio provided $14 million to demolish a previous plant at the site.

Pennsylvania incentives to foster downstream development

The Pennsylvania legislature approved up to $650 million per plant in tax credits over a 30-year period for new downstream investment, according to a Feb. 5, 2020 report by the Pittsburgh Post-Gazette.

This builds on a previous program that awarded tax credits to Shell, it reported. The new initiative includes not just ethane but also other gas liquids.

The spokesperson of the Pennsylvania governor’s office said the bill will be rejected by the State governor. He is not opposed to tax breaks, but prefers to grant them case-by-case, Pittsburg Post-Gazzette reported.

West Virginia follows with own incentives

West Virginia-based Metro News newspaper reported on March 5, 2020 that the State Senate passed two bills to offer tax credits to promote petrochemical investment in West Virginia.

One of the bills aims to provide credits to businesses that store or transfer natural gas.

The intention is to attract investment from storage facilities to an ethane cracker.

The second will offer labor-related incentives to downstream natural gas industries that create jobs in the State, Metro News said.

Staunch environmental opposition

PTTGC has faced not just opposition but legal challenges. In September, PTTGC agreed to comply to stricter air standards than what the Ohio authorities demand. In exchange, environmental groups ended an appeal against an air permit.

The Sierra Club, Earthworks, Center for Biological Diversity, and Freshwater Accountability Project had objected to the air permit issued for the project in December 2018 by the Ohio Environmental Protection Agency.

“The plant continues to pose a serious public health risk to nearby communities, and opposition to the proposed project remains strong,” The Sierra Club said in a statement after the settlement.

The Sierra Club said it will continue to oppose the plant construction due to concern that cancer rates may increase for residents in the area. The organization claims 3.5 million members and supporters.

A group named the Ohio Valley Environmental Coalition said on March 3, 2020 that it was working to build opposition to PTTGC across the Ohio River from the planned PTTGC site. While Ohio gave approval, the air quality in parts of West Virginia will be impacted, it said.

In Pennsylvania, environmental groups have said that the Shell ethane cracker and polyethylene complex, which like PTTGC represents an investment of over $6 billion, will become the state’s biggest source of volatile organic compound emissions.

Pittsburgh’s mayor, Bill Peduto, said on October 2019 he opposed new petrochemical projects near his city.

Spotty history

Union Carbide, owned since 2001 by Dow Chemical, developed in 1920 in Clendenin, West Virginia, the world’s first ethylene plant, starting the petrochemical industry.

The region has seen petrochemical incidents such as a leak of an ingredient in pesticides in August 1985 at a Union Carbide plant in Institute, West Virginia that sent 200 residents to seek medical care.

The chemical leaked, methyl isocyanate, was the same released in a Bhopal, India plant also owned by Union Carbide that killed 5,295 people, according to The Atlantic. Survivors unsuccessfully fought decades to get clean-up efforts, The Atlantic added in a report on July 2018, to mark 30 years after the accident.

In 2014 Freedom Industries released dangerous chemicals into the Elk River near Charleston, West Virginia, affecting water supplies.

Pennsylvania-based Arkema North America, a subsidiary of a French company, has seen its top executives face trial in Texas over charges of negligently allowing dangerous chemicals to burn for days after a flood caused by Hurricane Harvey in 2017 and withholding information, the Philadelphia Inquirer reported on Feb. 9, 2020.

Downstream developments in the Northeast could potentially create 26,000 direct jobs and 43,000 indirect jobs, according to the American Chemistry Council. It could also result in $1.7 billion in annual federal taxes and $1.2 billion at the state and city level.

By Renzo Pipoli