Natural gas development was sure to be a boon for Pennsylvania.
The sustainability and growth of that boon depend on the continued responsible development of our energy resources and fair taxes and regulations set on the industry.
The Marcellus Shale is the second-largest gas field in the world. According to an IHS Markit Study, in 2015, natural gas from the Marcellus and Utica Shale plays accounted for a quarter of all natural gas produced in the United States and is expected to account for more than 40 percent of the nation's natural gas production by 2030.
The direct jobs are here and growing. On the generation side, the Energy Information Administration expects about 21 GW of natural gas-fired generators will come online in 2018, with 5.2 GW coming from Pennsylvania.
What does this mean for the chemical and petrochemical industries?
Although access to low-cost electricity is always a top priority for business and manufacturers, it’s the ethane and propane component of natural gas that compounds the value, will open doors for diverse investment and grow the industry supply chain here. These high-value natural gas liquids are used in basic petrochemical production and plastics manufacturing, and they are prevalent in the region’s natural gas.
Source: IHS Markit Study, “Prospects to Enhance PA’s Opportunities in Petrochemical Manufacturing”
With 73 percent of the United States and Canada's polyethylene and 67 percent of the polypropylene demand falling within a 700-mile radius of southwestern Pennsylvania, the region is ripe for investment. This is exactly what Shell had the foresight to capitalize on in Beaver County.
Source: IHS Markit Study, “Prospects to Enhance PA’s Opportunities in Petrochemical Manufacturing”
According to Shell, “Locating the facility close to both supply and markets will reduce economic and environmental transportation costs and provide regional plastic manufacturers with more flexibility, shorter supply chains and enhanced supply dependability.”
The IHS Markit forecast shows that, from 2026 to 2030, the expected ethane production from the Marcellus and Utica Shale plays will be enough to support up to four additional world-scale ethane steam crackers in the region, even after meeting the demand from the future Shell Pennsylvania Chemicals cracker.
In other words, the best is yet to come.
With Pennsylvania’s access to abundant natural gas, strong transportation network and skilled labor force, there is opportunity to attract a world-class supply chain centered on the petrochemical and plastics markets that could rival the Gulf Coast.
To back that up, a recent IHS Markit study, “Benefit, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast,” determined that a new facility in the Shale Crescent USA region (Pennsylvania, West Virginia, Ohio River Valley) would generate a four-times- higher net-present-value cash flow than a comparable investment in the Gulf Coast.
Source: Shale Crescent USA
The commonwealth has the opportunity to play the long game and leverage the responsible development of the state’s energy resources to attract diverse and global investment for long-term benefit, putting Pennsylvania in an enviable position.