Petrochemical boom shows Pennsylvania’s prominence, possibilities

Steve Kratz Steve Kratz

Shell Chemicals’ $6 billion investment in western Pennsylvania is quite the boon for the region. But for Team Pennsylvania President and CEO Ryan Unger, it’s only the beginning of what could be a petrochemical revolution in the commonwealth.

“One petrochemical facility in the form of Shell is great, but we think there is opportunity for much more here in Pennsylvania,” Unger said during a recent interview with The Stream.

A March 2017 study conducted by IHS Markit, a leading market research firm, found the Marcellus and Utica shales could support five ethane cracker plants, not just the one complex that Shell is building in Beaver County. The study was sponsored by Team Pennsylvania, a nonprofit partnership between the private and public sectors that supports education and economic development.

The IHS Markit study came after Shell Chemicals announced its Beaver County plans in June 2016. The findings were eye-opening for Unger and many others in the economic development community.

“We, as a commonwealth and as leaders in economic development, decided to be proactive and say, ‘What next?’” Unger said.

Petrochemicals: What’s next for the natural gas boom

As for what’s next, more petrochemical investments could be the answer. The study sparked international interest after it was released in March, Unger said.  

Now, it’s just a matter of spreading the word and using the study to bring more economic opportunities to Pennsylvania.

“We need to bring all the right players together,” Unger said. “We need to begin just talking about the industry and how we can, again, put Pennsylvania out there as a place for this type of investment.”

Unger said the Pennsylvania Department of Community and Economic Development is working with local partners to identify possible sites for petrochemical companies. It can be difficult to find suitable areas because most such facilities require access to deep channel water and approximately 1,000 acres of land.

But that doesn’t mean it’s impossible. It just takes a little creativity.

Ryan Unger discusses how petrochemical development will help Pennsylvania capitalize on its natural gas resources.

“If you were looking at where Shell located, there was a company there already,” Unger said. “It was a creative solution locally with good market intelligence partners.”

Much of the focus has been in western Pennsylvania, but other parts of the state could provide opportunities, too. For example, a project the size of the Shell plant might not work in Marcus Hook. But a smaller project might be perfectly suited there.

“There’s different types of projects,” Unger said. “The state and other local partners are exploring those opportunities with different companies to identify what they could be.”

Petrochemicals allow interstate alliances

Bringing more petrochemical facilities to the Marcellus Shale play will require working with the right local intelligence partners. It will also require forming alliances with organizations in Ohio and West Virginia. Team Pennsylvania and state economic development leaders are working on that.

“We’ve continued to work with Ohio and West Virginia on those areas that we feel it makes sense to move forward together on,” Unger said. “They’ve been great partners, and I think you’ll begin to see in the near future some other areas we can collaborate on.”

Specifically, Unger said his group is working across state lines to find regional solutions to infrastructure. The workforce “doesn’t know state boundaries,” he said.

At its height, construction of the Beaver County Shell Chemicals facility will see more than 6,000 workers. And those workers might see additional opportunities in the region. Thailand-based PTT Global recently purchased 167 acres in Belmont County, Ohio, as a possible site for a petrochemical facility. That site is only a half-hour drive west of the Pennsylvania-Ohio border.

“Those are predominately Pennsylvania electricians and workers looking for an additional opportunity in the region,” Unger said.

Pennsylvania has petrochemical competitive edge

Petrochemical facilities are essential for capitalizing on the Marcellus boom. Last month, former Allegheny Conference on Community Development CEO Dennis Yablonsky told The Stream that the Shell and PTT investments put western Pennsylvania in the “first or second inning of the downstream game.”

Unger said he hopes Pennsylvania uses the March report to get more points on the petrochemical board.

The report placed Pennsylvania among the most competitive petrochemical markets in the world. And Unger said that was an “oh, wow” moment.

“It really opened our eyes that we need to broaden the scope of the kind of companies we’re looking for and where we’re looking for them.”

Steve Kratz Steve Kratz

Steve Kratz is a Director at Bravo Group and handles the interests of the company's energy practice clients, applying his knowledge of state economics to coordinate their community and business interests.

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