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September 13, 2023 03:14 PM

Promise of Appalachia's shale fields remains, Shale Crescent official says

Frank Esposito
Senior Staff Reporter
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    Frank Esposito
    Greg Kozera of Shale Crescent USA speaks at a Sept. 11 Society of Plastics Engineers event.

    Fairlawn, Ohio — The gas-rich Appalachian region of Ohio, Pennsylvania and West Virginia continues to attract businesses looking for lower feedstock costs and shorter supply chains.

    And future investments could include production of propylene, a key feedstock used to make polypropylene resin.

    Several companies have contacted Shale Crescent USA, a trade group based in Marietta, Ohio, about the possibility of building propane dehydrogenation (PDH) propylene units in the area, Marketing Director Greg Kozera said Sept. 11 at a Society of Plastics Engineers meeting in Fairlawn.

    The area has access to low-priced natural gas from the Marcellus and Utica shale fields, which have been developed by horizontal drilling and hydraulic fracturing (fracking). This feedstock access prompted Shell Chemical to build a multibillion-dollar polyethylene resin and ethylene monomer complex in Monaca, Pa., which opened last year.

    Kozera declined to identify the companies looking at PDH development, but he said they're interested in the region "for the same reason Shell was."

    "It would help if we could get a PDH unit and another [ethane] cracker," Kozera said. "It just makes sense to build there instead of elsewhere in the world."

    Materials firm PTT Global of Thailand has cleared land in Dilles Bottom, Ohio, for a potential plastics and petrochemicals unit, but the firm hasn't made a final decision on the project, which it first announced in 2015.

    Natural gas can be converted into ethane and then into ethylene and PE resin. The Shell complex includes the first U.S. PE resin plant built outside of the Gulf Coast in at least 40 years.

    The region also is close to a large percentage of U.S. manufacturing. Shell has said that 70 percent of North American PE resin demand is with a one-day drive of its Pittsburgh-area complex.

    Lower natural gas prices in 2023 have been challenging for suppliers by affecting investment economics, according to Kozera. Natural gas prices began 2023 near $4 per million per British thermal unit — one of its highest levels in recent years — but had declined to $2.60 in early trading Sept. 12.

    Kozera cited data showing that the Shale Crescent area has a 23 percent cost advantage of deliveries of PE and ethylene vs. the U.S. Gulf Coast, and an 11 percent cost advantage on PP and PDH propylene from that region, where most U.S. petrochemicals production is located.

    Kozera also provided data showing that feedstock and supply chain advantages now allow Ohio manufacturing to be competitive with China on such plastic products as toothbrushes, dustpans, tackle boxes, booster seats, pallets and window shutters.

    The area also can provide lower costs on electricity, although China's labor costs remain lower, even though those have increased in recent years.

    "U.S. oil and natural gas production are key to reviving U.S. manufacturing," Kozera said.

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