Tags: Hurricane Harvey | harvey | northeast | petrochemical | expansion

Hurricane Harvey: Another Reason for Northeast Petrochemical Expansion       

Image: Hurricane Harvey: Another Reason for Northeast Petrochemical Expansion       
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By    |   Thursday, 31 Aug 2017 10:49 PM

For over 75 years if you wanted to build or expand a petrochemical facility in the United States you wouldn’t be wrong if you located it on the Gulf Coast. The main reasons were access to cheap, abundant energy and petroleum feedstocks the building blocks of petrochemicals. Access to world markets through Gulf Coast ports was another good reason.  

That conventional wisdom is getting challenged today. The northeast US that is being called, “The Shale Crescent”, now has the cheapest most abundant natural gas in the industrialized world because of the Marcellus and Utica shales. If eastern Ohio, southwestern Pennsylvania and northern West Virginia were a country they would be the third largest natural gas producer in the world. This region produced 5% of US natural gas in 2010. Today that number is in excess of 30% and by 2020 the northeast will be producing 35% of US natural gas supply. Currently natural gas liquids (NGLs), primarily ethane, propane and butane are being shipped via pipeline to Marcus Hook, PA for shipment to Europe.  Eastern Canada and the Gulf Coast are served via other pipelines. A recent study said that despite these shipments out of the region the northeast still had enough NGLs to supply at least 5 ethane crackers. This is important because ethane comes from natural gas that is priced domestically, currently at $18 per BOE. Most crackers around the world use naphtha from crude oil that is priced globally, currently around $50 per barrel. This gives the northeast a big cost advantage.

Shell is currently the only company building a cracker in the northeast. That could change as companies begin to realize the advantages the northeast (Shale Crescent) has. In addition to cheap abundant energy and feedstocks the Shale Crescent also offers; proximity to 50% of the US and Canadian markets, abundant fresh water like the Ohio River and an experienced petrochemical and construction workforce. Ohio ranks #1 in US Plastics Manufacturing employment. The region also has good rail and river access to ocean ports.

Hurricane Harvey pointed out another advantage. The Shale Crescent doesn’t get hurricanes like the Gulf Coast where refineries and petrochemical plants are being shut down because of the storm. It makes sense to diversify our petrochemical production so that a major hurricane can’t seriously damage or shut it down.

The petrochemical industry was born in the early 1920s by Union Carbide near Charleston, WV. The world has changed. Abundant energy and feed stocks, water for processing and transportation, proximity to markets, an experienced work force all make it time for industry to take another look at this forgotten part of the country and consider return.

Greg Kozera is the Director of Marketing for Shale Crescent USA www.shalecrescentusa.com . He has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles.

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Abundant energy and feed stocks, water for processing and transportation, proximity to markets, an experienced work force all make it time for industry to take another look at this forgotten part of the country and consider return.
harvey, northeast, petrochemical, expansion
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2017-49-31
Thursday, 31 Aug 2017 10:49 PM
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