Shell plans world-scale US ethylene cracker near Marcellus shale region

Shell ethylene unitShell is planning to build a world-scale ethylene cracker with integrated derivative units in the Appalachian region of the US, company officials said on Monday.

The cracker would process ethane from Marcellus natural gas to produce ethylene, one of the primary building blocks for petrochemicals, officials said.

Shell is joining producers such as Dow Chemical, Chevron Phillips Chemical and LyondellBasell, who have each said they will build or are considering a new US cracker in coming years.

Shell is evaluating derivative choices and said the leading option is polyethylene (PE), an important raw material for items from packaging and adhesives to automotive components and pipe.

Most of the PE production would be used by northeastern US industries, the company said.

“Building an ethane-fed cracker in Appalachia would unlock significant gas production in the Marcellus region by providing a local outlet for the ethane,” said Ben van Beurden, Shell executive vice president of chemicals.

“This fits well with our strategy to strengthen our chemicals feedstock advantage and would be another step in growing our chemicals business to meet the increasing demand for petrochemicals.”

Demand for PE in North America is expected to grow, so the economic and efficiency benefits of a regional cracker make the configuration attractive, the company said.

As a leader in gas technologies, Shell said it has an array of long-term options to monetize natural gas.

Extracting ethane and other natural gas liquids for petrochemicals production is one of those options that also include developing shipping solutions for LNG (liquefied natural gas); proprietary gas-to-liquids technology to produce fuels, lubricants and chemicals; and gas-for-transport in markets focusing on heavy duty vehicles, marine and rail transportation.

“US natural gas is abundant and affordable. Shell has the expertise and technology to responsibly develop this vital energy resource, including associated products such as polyethylene for the domestic market,” said Marvin Odum, president of Shell.

“With this investment, we would use feedstock from Marcellus to locally produce chemicals for the region and create more American jobs. As an integrated oil and gas company, we are best-placed in the area to do this.”

Selection of the site for the cracker and derivative units will be determined in the next phase of the project, officials said. Building the facility is subject to receiving all applicable permits.

Financial terms and specific capacity information have yet to be disclosed.

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