July 21, 2020 Read More →

Pandemic, markets cast doubt on future of plastics megaprojects

Appalachian Voice:

The economic prospects of a proposed Appalachian petrochemical complex, which would bring plastics manufacturing and petrochemical infrastructure to the region, appear increasingly unsure in the wake of the COVID-19 pandemic and a rapidly changing market.

For the past decade, lawmakers and corporate interests have spoken in favor of a potential petrochemical hub in the Ohio River Valley region of Appalachia. The proposed network of industrial facilities and pipelines would come several decades after a similar petrochemical complex developed along the Gulf Coast. This buildout would include a collection of industrial sites devoted to plastics manufacturing with ethane cracker plants. Cracker plants “crack” ethane, a hydrocarbon found in fracked gas, into ethylene, a product that can be used in plastics production. Other infrastructure would include underground storage units for natural gas liquids and petrochemicals.

As of July, one cracker plant is under construction in Beaver County, Pennsylvania, and a potential cracker plant in Belmont County, Ohio, is on hold after one of two investors backed out. 

Economists from the Institute for Energy Economics and Financial Analysis, an organization researching energy economics, issued a report in June 2020 calling into question the long-term viability of the Shell cracker plant in Pennsylvania. The report highlights the economic fallout that may result from the coronavirus. However, the IEEFA report is clear that the petrochemical market Shell is entering was shrinking even before the arrival of the virus.

“When the project was being planned circa 2010-2012, the price of plastic resin pellets was approximately $1 per pound,” the report noted. “Today […] the price is 60 cents per pound or lower — and some indexes are reporting prices in the 40 cents-per-pound range. Futures prices through 2021 are in the middle 20 cents-per-pound range.” 

[Clara Weybright]

More: Petrochemical Development in Appalachia Faces New Challenges

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