By ISABEL ORDONEZ
Royal Dutch Shell said it has selected a site near Pittsburgh for the potential construction of a petrochemical complex that would process ethane from the abundant natural gas produced in the Marcellus Shale region.
The announcement is a step forward in Shell's plans to build a giant ethylene crackerfor conversion of the ethane found in natural gas into ethylene, a core component for plastics and fertilizernear the natural-gas rich Marcellus Shale formation, which underlies much of the US Northeast.
The company was expected to unveil the final location by the end of the first quarter.
Ohio, West Virginia and Pennsylvania had all hoped to be selected for the site and have offered tax incentives to Shell. Natural gas production in those states is surging due to shale drilling.
Shell said it has signed a land option agreement with Horsehead Corp. for a site in Potter and Center Townships in Beaver County, about 35 miles northwest of Pittsburgh.
"This is an important step for the project, and we look forward to working with the communities in Pennsylvania, and gas producers across Appalachia, as we continue our efforts to develop a petrochemical complex," Dan Carlson, general manager of new business development at Shell Chemicals, said in prepared remarks.
Shell's would be the first ethylene cracker built in the country since 2000. Its construction illustrates the revival of the US petrochemical industry, which by the end of the last decade had been considered moribund amid high prices for natural gas liquids.
At the time, US chemical manufacturers could barely fend off imports from the Middle East and Asia, which had better access to cheaper natural gas.
The next steps for the project include additional environmental analysis of the selected Pennsylvania site, further engineering design studies assessment of the local ethane supply, and continued evaluation of the economic viability of the project, the company said.
The Pennsylvania site was selected due to various factors, including good access to liquids-rich natural gas resources, water, road and rail transportation infrastructure, power grids, economics, and sufficient acreage to accommodate facilities for a world-scale petrochemical complex and potential future expansions, Shell said.
In addition to an ethylene cracker, Shell is considering polyethylene and monoethylene glycol units to help meet increasing demand in the North American market, the company said.
Dow Jones Newswires