For the past few years, we've been reporting on all the new ethylene crackers that have been proposed to take advantage of the U.S. shale gas revolution. You know, the one that's supposed to bring stability (and maybe even lower prices — although that's a controversial topic) to the polyethylene market?
But what's often underemphasized in all the of new-cracker hype is the fact that some of these projects will never happen. Many companies can issue press releases about big petrochemical projects, but not everyone will follow through.
Which projects are pie-in-the-sky, and which ones will actually start cracking out ethylene in the next few years? For guidance, check out Alex Tullo's post yesterday in The Chemical Notebook blog, titled "The U.S. Cracker Leader Board."
Tullo ranks 10 major cracker projects in order, starting with Chevron Phillips' cracker in Baytown, Texas, and its PE plants in Sweeny, Texas ("Probability: nearly 100 percent. Only meteors or aliens could stop this one.")
Of the 10, Tullo gives four of them a probability of 80 percent or more of happening. Three more are above 50 percent. So that's not bad — a better than 50/50 chance that we'll have seven companies moving ahead with big new cracker projects.
Tullo isn't sold on new crackers in the Midwest, which have gotten a lot of press in Pennsylvania, Ohio and West Virginia. When the projects were announced, the thinking was that they could work because of the combination of ample supplies of low-cost natural gas and large numbers of plastics processors in the region.
But Tullo guesstimates that Shell only has a 30 percent chance of building an ethylene cracker and PE plant in Monaco, Pa. ("This project is not on the Gulf Coast, so lack of connectivity with the rest of the chemical world is a big disadvantage.") And Odebrecht's plans for a cracker and PE plant in Parkersburg, W.Va., is just behind that, at 29 percent. ("Just slightly less likely than the Shell project.")
Interesting analysis, and a good reminder that there are still plenty of questions to be answered as we enter the shale era.