New Cracker For Appalachia

Seeking to capitalize on new supplies of low-priced ethane from shale natural gas, Shell is developing plans for ethylene and derivatives facilities in Appalachia. Such a complex would cost billions of dollars and reverse the chemical industry's exodus from the region over the past two decades.

The ethylene plant would be "world-scale," meaning an annual capacity of at least 1 million tons of ethylene, according to Ben van Beurden, Shell's executive vice president for chemicals. Among possible downstream products, polyethylene is a leading candidate, van Beurden said at a press briefing, but the company is also considering ethylene glycol and other derivatives.

Shell is the latest petrochemical company to announce plans for new U.S. ethylene capacity. Dow Chemical and Chevron Phillips Chemical have proposed new Gulf Coast crackers, and firms such as Westlake Chemical and LyondellBasell Industries are expanding existing ones.

For its new cracker, Shell will exploit ethane from the Marcellus shale, a gas-rich mineral formation that stretches through New York, Pennsylvania, and West Virginia. Like the companies proposing new Gulf Coast facilities, Shell has not announced an exact location or a construction timetable.

At the press briefing, van Beurden acknowledged that Shell is revealing the Appalachia project early as a way of staking its claim on the region's ethane. Other options for the gas include sending it via pipeline to Canada and the Gulf Coast. But, "I believe our project makes the most sense," van Buerden said.