Shell's massive petrochemicals project takes shape in Pennsylvania

Monaca, Pa. — Shell Chemical believes it's found the future of the polyethylene resin market on the banks of the Ohio River outside of Pittsburgh.

That's where Shell is building a massive petrochemicals complex that will use ethane from shale gas produced in the Marcellus and Utica basins to make around 3.5 billion pounds of PE resin per year. The complex will include four processing units, an ethane cracker and three PE units.

The project, located on 386 acres in Monaca, will be the first U.S. petrochemicals project built outside of the Gulf Coast of Texas and Louisiana in several decades. Production is expected to begin in the early 2020s.

"I've worked in the industry for years and I've never seen anything like it," business integration lead Michael Marr told Plastics News on a recent visit to Monaca.

More than 6,000 workers were at the site in early October. Most of the workers are from the Pittsburgh area, Marr said, but some of those in skilled trades like electricians, welders and pipefitters have been brought in from Baltimore, Philadelphia, Cleveland, Buffalo, N.Y., and beyond.

Shell selected the site in early 2012, with construction beginning in late 2017. Marr said the Monaca site was chosen not only for its access to shale gas deposits, but because of its access to a major riverway and interstate highways.

Some major pieces of equipment needed for the plant, including a 285-foot cooling tower, have been brought in on the Ohio River. "You can't bring some of these parts in on rail or truck," Marr said.

Shell removed an entire hillside — 7.2 million cubic yards of dirt — to create enough flat land for the complex. The site previously was used for zinc processing by Horsehead Corp., and the infrastructure that was already in place for that plant "gave us a head start on the footprint," Marr added.

The ethane that Shell will convert into ethylene and then into PE resin will be brought in from Shell shale operations in Washington County, Pa., and Cadiz, Ohio. Annual ethylene production capacity at the site will exceed 3 billion pounds.

Most of the PE resin made at the site will be sold into the U.S. market.

"Seventy percent of U.S. polyethylene converters are with within 700 miles of the plant," Marr said. "That's a lot of places where we can sell into pipe and coatings and films and other products."

Many North American PE makers have opened major new facilities on the U.S. Gulf Coast in the last several years in order to take advantage of low-priced shale feedstock. Shell officials have said that their project's location in Appalachia will give it advantages in shipping and delivery times over locations in Texas and Louisiana.

Shell officials have said that 80 percent of the parts and labor for the massive project are coming from the United States.

They also estimate that 80 percent of its economic benefit will be in the United States.

In North America, Shell will work with resin distributors Bamberger Polymers Corp., Genesis Polymers and Shaw Polymers LLC to market PE made at the site.

James Ray, a market analyst with consulting firm ICIS in Houston, said Shell "is in a position to be perhaps the most profitable PE producer globally, likely with a very low-cost legacy feedstock deal and production operations right on their customers' doorstep."

"While [Shell] will initially export a reasonable portion of their production, in time it will be consumed primarily by regional customers," he added.

Shell "should have a freight advantage to the northeast and north central markets, and they have an ethane cost advantage," according to Robert Bauman, president of Polymer Consulting International Inc. in Ardley, N.Y. But he added that Shell might be challenged on resin pricing by other suppliers already in the market.

The Shell project has drawn attention to the tri-state area of Ohio, Pennsylvania and West Virginia. A similar resin and feedstocks joint venture in Dilles Bottom, Ohio, is being analyzed by PTT Global Chemical of Thailand and Daelim Industrial Co. of South Korea.

At the GPS 2019 conference in June, officials with the Shale Crescent USA Trade group said that 85 percent of U.S. natural gas production growth from 2008-18 took place in the Ohio Valley.

The region "produces more natural gas than Texas with half of the land mass," business manager Nathan Lord said. The area "is based on top of feedstock and in the center of customers," he added, "and a large amount of the U.S. population is within a one-day drive."

Lord also cited a 2018 study from IHS Markit that showed the Ohio Valley has a 23 percent cost advantage on PE vs. the U.S. Gulf Coast for material made and shipped in the same region.

Pittsburgh Regional Alliance President Mark Thomas said that the economic impact of Shell's multi-billion dollar investment in the region "has been significant and its impact is direct, indirect and induced."

"Construction of the facility is putting thousands of skilled trades professionals to work every day, and once the plant is online, there will be some 600 well-paying jobs created to support its operations," he added. "Beyond that is the broader economic opportunities associated with new restaurants, hotels and other businesses related to the project, now and into the future.

"Shell has been a good partner to work with and is delivering beneficial community-focused impact. Not to be overlooked are its investments in the community — especially those related to developing the workforce in collaboration with our community colleges."

Shell has declined to reveal the cost of the project, although estimates from consultants have ranged from $6 billion to $10 billion. Pennsylvania Gov. Tom Wolf has said that the Shell project is the biggest investment site in Pennsylvania since World War II.

At least 50 cranes were active at the site in early October. Marr said that at one point the site was using 150 cranes. One is 690 feet tall, making it the second-tallest crane in the world.

Shell is making full use of technology at the site, using drones and robots to check out pipelines and to provide aerial views of the facility for inspections. Global construction giant Bechtel Corp. is Shell's main partner on the project.

Shell also has become involved in the local community, donating $1 million to create the Shell Center for Process Technology at the Community College of Beaver County. That center now offers a two-year process technology degree. The firm also supplied a $250,000 grant to allow the Pennsylvania College of Technology in Williamsport, Pa., to acquire a rotational molding machine.

Shell expects around 600 onsite jobs when the complex is completed. In addition to the reactors, facilities being built at the site include a 900-foot cooling tower, rail and truck loading facilities, a water treatment plant, an office building and a lab.

The site also will have its own cogeneration plant capable of producing 250 megawatts of electricity. Purge bins for resin production were installed in April. Marr said the next major step to take place at the site will be building out its electrical scope and connecting various segments of the site with a network of pipes.

Even as it completes work on a project that will increase the region's PE supply, Marr said Shell is aware of concerns over plastic pollution, particularly those involving single-use plastic products. The firm was a founding member of the Alliance to End Plastic Waste, an industry group that's investing $1.5 billion to reduce plastic waste worldwide. Locally, Shell is working with Beaver County to enhance recycling programs in the region.

"We know that plastic waste doesn't belong in oceans," Marr said. "More recycling is needed and we need to establish a more circular economy."

Shell also operates three major petrochemical facilities in the United States, at Deer Park, Texas; and Norco and Geismar in Louisiana. But Monaca marks a return to plastics: the firm had exited the commodity plastics market more than a decade ago.

Shell Chemical, a unit of global energy firm Royal Dutch Shell, launched its Shell Polymers brand in May 2018 at the NPE2018 trade show in Orlando, Fla. Shell Chemical is based in The Hague, Netherlands, with U.S. headquarters in Houston.