HOUSTON (March 16, 1:15 p.m. ET) — Shell Chemical LP is bringing a new petrochemicals site to western Pennsylvania, and new polyethylene capacity might not be far behind.
Houston-based Shell announced March 15 that it has signed a land-option agreement with Horsehead Corp. of Pittsburgh to evaluate a Horsehead zinc processing site about 35 miles northwest of Pittsburgh near Monaca, Pa. Last year, Shell officials said that because of newfound supplies of natural gas found in shale rock formations in the region, the firm wanted to develop a cracker unit — to process natural gas-based ethane and to make ethylene feedstock — and possibly downstream PE units.
“This is an important step for the project,” said Dan Carlson, Shell's new-business development general manager, in a March 15 news release. “We look forward to working with the communities in Pennsylvania, and gas producers across Appalachia, as we continue our efforts to develop a petrochemical complex.”
Officials added in the release that Shell “is also considering polyethylene and monoethylene glycol units, to help meet increasing demand in the North American market.” The new capacity “would be used by industries in the Northeast.”
Horsehead plans to close its Monaca plant in late 2013 when it opens a new plant in North Carolina. If Shell exercises its option on the land, Horsehead would need to vacate the site by April 30, 2014.
“We believe this option provides the best value proposition for Horsehead among the several alternatives we are considering for this site,” President and CEO Jim Hensler said in a news release.
The announcement is the latest major move in the shale gas rejuvenation of the North American petrochemicals market. The Marcellus Shale — a geological region covering parts of Pennsylvania, Ohio and West Virginia — is believed to hold one of the largest natural gas deposits on the continent.
Shell already produces ethylene and related feedstocks at U.S. plants in Deer Park, Texas, and Norco, La. The firm hasn't been involved in the PE market since it sold off its ownership stake in Basell NV in 2005. Market watchers have said Shell is likely to partner with an existing PE maker to bring PE production to the new site.
In an email reply, Shell's Carlson said PE is “a leading option for derivatives” at the proposed site, along with MEG. He added that, in the case of PE, Shell “would use standard industry technology and [is] currently working on the specifics as part of the project development.”
Potential products, according to Carlson, would include a combination of low, linear low and/or high density PE.
The ongoing natural gas boom already has spurred several North American PE makers to announce plans for new capacity. Most recently, Formosa Plastics Corp. USA earlier this month said it will spend $1.7 billion to expand its complex in Point Comfort, Texas.
That expansion will include a new LDPE plant with annual capacity of almost 700 million pounds, the company said.