July 2, 2020 Read More →

Questions raised about Trump administration’s sunny gas and plastics forecast

The Columbus Dispatch:

A new U.S. Department of Energy report paints sunny picture of Appalachia being the perfect location for a petrochemical plant that would manufacture chemicals used for plastics. Financial experts warn the numbers don’t add up.

A proposed petrochemical ethane cracker plant along the Ohio River would transform eastern Ohio, bringing 600 permanent jobs and an estimated 6,000 construction jobs, according to a U.S. Department of Energy report released this week.

The 75-page report, The Appalachian Energy and Petrochemical Renaissance, which was commissioned by President Donald Trump, paints a rosy picture of how the industry would save the region.

“The energy-rich Appalachian region is now the single largest natural gas producing region of the country. …These resources can serve as feedstocks for new opportunities in low-cost power generation, petrochemicals, and the manufacturing industry,” said Secretary of Energy Dan Brouillette in a statement.

Energy companies are also being crushed by a decline in gas and oil prices during the pandemic, raising questions about whether they will move forward on enormous investments in projects such as petrochemical plants. Royal Dutch Shell this week announced a $22 billion write down, following a $17.5 billion write down by BP.

“When companies are getting smaller with these write downs, it’s questionable whether it makes sense for them to pursue big projects like petrochemical facilities,” said Kathy Hipple, a financial analyst with the Institute for Energy Economics and Financial Analysis, echoing previous concerns about the plant’s viability.

“The other thing is the price of plastic is significantly down. I think the third thing is that there’s this new notion of the circular economy. The world will have less virgin plastic. There’s more and more effort to recycle existing plastic.”

“So I think the industry is facing a lot of headwinds, and this is happy talk from the Trump administration,” she said.

[Beth Burger]

More: Federal agency touts petrochemical plant, experts say not so fast

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