The Shale Effect: Shell Starts $6-billion PA Ethane Cracker Plant

The Shale Effect: Shell Starts $6-billion PA Ethane Cracker Plant

Shell Chemicals has broken ground on a $6-billion ethane cracker plant in Potter Township in Pennsylvania’s Beaver County north of Pittsburgh, which is expected to create about 6,000 construction jobs and some 600 permanent ones when it goes online. It’s a big new chapter in the state’s fracking boom story.

The plans include the construction of a 250-megawatt natural gas-fired power plant, which will produce electricity and steam to run the cracker plant, according to local publication Beaver County Times, which has been tracking the project for years. “About one-third of the electricity produced at the site will help supply the local electrical grid,” the Times says.

The Times and Shell say the facility would produce 1.6 million metric tons of polyethylene, which is used to make products such as plastic wrap, sports equipment and car parts.

The source of the feedstock materials that the cracker plant will produce comes from the natural gas and gases drilled from the Marcellus shale and Utica basins that spread throughout a big chunk of the Northeastern United States, including Pennsylvania and upstate New York, which officially banned fracking in 2015. Natural gas production has surpassed coal production in Pennsylvania, long a mainstay of the state’s economy.

The project start caps a multi-year effort by Shell to get the project into approval, including working with environmental groups whose only goal is to stop anything related to fracking.

For example, environmental protest group PennFuture launched an attack on a $1.65 billion tax-incentive package given in an effort to lure Shell to the central part of the state. “Because the cracker plant is expected to create 600 full-time jobs, PennFuture said the subsidy is worth approximately $2.67 million per job.”

Well, clearly PennFuture has not calculated the multiplier effect when 600 locals are using the proceeds from their salaries to buy homes, home goods, cars, food and other goods and services that stimulate an economy. So we’d like to revisit the net effects of the plant on the economy after it opens. For now, 6,000 construction jobs will have to do.

PennFuture is running ads that the Shell plant will emit pollutants such as sulfur dioxide, benzene and toluene, which exacerbate symptoms of asthma and can cause cancer, it claims.

Shell, for its part, has agreed to “fence-line monitoring” around the plant as part of its permitting approvals and by using emission offsets to address air quality in the region, according to spokesman Joe Minnitte.

The environmental fight against the plant will go on; but it’s hard to argue with the economic benefits and next-stage products that fracking is bringing to Pennsylvania since the boom gained traction in 2007.

The state “had the second-largest employment increase over [2007-2012], positioning itself only after Texas, a major oil- and natural gas-producing state,” according to the Bureau of Labor Statistics.

“Most of Pennsylvania’s substantial employment gains in the oil and natural gas industry were due to the recent surge in shale gas production brought about by the drilling in the Marcellus Shale.

“Pennsylvania had the second-highest increase in gross withdrawals (2.0 trillion cubic feet) from 2008 to 2012, trailing only Louisiana in this regard.8 As a result, Pennsylvania went from being the 10th-largest state by oil and natural gas employment in 2007 to being the 6th largest in 2012.”, an industry group, says fracking jobs in Pennsylvania pay on average “$62,000, which is around $20,000 higher than the state average.” It also cites a study by Natural Resources Economics that says full development of the Marcellus Shale play in Pennsylvania could support 211,000 jobs.”

Hydraulic fracturing as a technology and technique to extract gas and oil from shale formations has been around since the 1940s. But the technique has improved in recent decades, which has sparked the fracking boom that is re-shaping the United States as the world’s leading energy producer.

“The United States’ status as a net exporter of natural gas is expected to continue past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing exports of liquefied natural gas (LNG),” according to the U.S. Energy Information Administration.

Opponents of fracking will argue that fracking creates jobs, just not that many. Or that the wage increases in the industry are not all that great. One fact not in dispute: The U.S. is emerging as a world leader in energy production, which is re-shaping the geo-political map:

“The United States remained the world’s top producer of petroleum and natural gas hydrocarbons in 2016 for the fifth straight year despite production declines for both petroleum and natural gas relative to their 2015 levels,” the EIA adds.

“The United States has been the world’s top producer of natural gas since 2009, when U.S. natural gas production surpassed that of Russia, and it has been the world’s top producer of petroleum hydrocarbons since 2013, when its production exceeded Saudi Arabia’s.”

These are good jobs, too, especially for welders, a skill in short supply in energy-production regions such as Louisiana and Texas.

For Pennsylvania’s short term, 6,000 construction jobs will do quite a bit to stimulate the region’s economy. Long-term, the Keystone state will play a key role in the ecosystem of the nation’s energy economy.

$14 billion LA Natural Gas Plant Shelved. Gulf Region Shrugs.