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June 29, 2018 02:00 AM

Catching a (second) wave with petrochemicals in Appalachia

Frank Esposito
Senior Staff Reporter
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    PLG Consulting
    Robinson

    Petrochemical projects in the Appalachian region of the United States will be able to ride the second wave of expansion in the region.

    Investments — including major amount of new polyethylene resin capacity — are happening as a result of newfound supplies of shale gas and oil in North America. At the recent Northeast U.S. Petrochemical Construction conference in Pittsburgh, industry consultant Taylor Robinson identified first and second waves of these projects.

    In the first wave, from 2015-19, only 1 percent of investments have gone to Appalachia, as compared to about 67 percent happening on the U.S. Gulf Coast, said Robinson, who's with PLG Consulting in Chicago.

    Appalachia will have a much larger presence in the second wave, Robinson added. During the 2020-25 timeframe, the region — which covers parts of Ohio, Pennsylvania and West Virgina — will account for 16 percent of North American petrochemical projects.

    This second wave includes Shell Chemicals' massive site under construction outside of Pittsburgh. In dollar terms, Appalachian petrochemical investment is expected to grow from $1.6 billion in the first wave to $13.6 billion in the second wave.

    A third wave of investments happening after 2023 is likely to include a feedstocks and resins joint venture between PTT Global Chemical of Thailand and Daelim Industrial Co. of South Korea in Dilles Bottom, Ohio.

    The extent of "third wave" PE resin capacity growth for North America will be determined by cracker-build decisions, demand growth and global export competitiveness, Robinson said.

    He added that a PE plant in the Northeast United States will offer a 5-10 percent total delivered cost advantage for Northeast and Midwest PE markets. That advantage includes a reduction of more than 50 percent in logistics costs for local truck delivery vs. rail delivery from the Gulf Coast.

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