Pennsylvania’s Next Era in Energy
In Pennsylvania, we will likely always be well-known for our coal, manufacturing, and steel—throughout history these industries have provided the necessary framework to support the advanced industries of today and tomorrow.
As a result of abundant natural resources and comprehensive infrastructure, we are seeing the Natural Gas Liquids (NGLs) production — specifically ethane — reach new heights. As a main feedstock for polyethylene, a major plastics component, our abundant regional ethane supply is powering our potential for greater plastics production in Pennsylvania. This includes products ranging from construction materials and food-grade packaging to clothing and retail items, and everything in between.
Under Governor Tom Wolf’s leadership, Pennsylvania has been developing new, high-growth industries in its energy sector through strategic, targeted investments. Nowhere is this more evident than with the highly-anticipated final investment decision by Shell to build a major petrochemical complex in Beaver County. This project will create 6,000 full-time construction jobs at peak and 600 full-time permanent positions when complete. With its $6B investment, Shell is setting the stage for future growth through downstream economic opportunities and job creation across the commonwealth.
How will future growth evolve?
Since 2010, western Pennsylvania has been experiencing a surge in Marcellus and Utica NGL production. Various industry partners have invested billions in midstream pipeline infrastructure, gas processing plants, and fractionation plants — feeding a rapidly expanding and evolving market.
Currently, 100% of the ethane produced in the region is piped out-of-state to processing facilities in the Gulf Coast, Canada, and Europe. Now, with Shell’s commitment, Pennsylvania can grow beyond a mere exporter and have a greater role in the various downstream utilizations of its resource — directly benefiting both the economy and residents.
Shell’s reasons for choosing Pennsylvania are also compelling factors for other potential energy investors: proximity to ample supply of NGLs (specifically ethane), attractive NGL feedstock costs, and easy access to the majority of polyethylene customers.
Even considering exported ethane and Shell’s ethane consumption, there is still a significant volume of recoverable ethane that can support the expansion of additional petrochemical facilities.
The ethane is abundant. The ethane is cheap. And the market for ethane is right here.
Most U.S. ethane crackers are located in the Gulf Coast, far from the majority of their end-use customers, who are along the East Coast. In contrast, Shell’s new location in Pennsylvania is within 700 miles of 73 percent of the nation’s polyethylene users — placing them much closer than their competitors. As the supply chain shifts to meet customer demand, we see the potential for additional ethane crackers to come to Pennsylvania.
Tied to this growth is enormous potential for advancing plastics manufacturing. Pennsylvania is home to nearly a hundred plastics manufacturers primed to take advantage of lower feedstock and transportation costs to help maximize their profits and grow their businesses. We are also home to numerous world-renowned colleges and universities that support research, design, processing, plant engineering, and production.
These factors, combined with the leadership from a governor that is committed to fostering a pro-business climate in Pennsylvania, establish a winning combination for advancing the next generation of innovation.
How will Pennsylvania prepare?
The commonwealth is proactively helping expand the energy industry, including preparing sites for investment, reinforcing a pro-business culture, working closely with partners in the public and private sectors to capitalize on opportunities, and engaging communities at each step of natural gas project development. Pennsylvania is working to ensure our workforce is prepared to take advantage of the new opportunities the energy industry has presented by creating quality workforce training programs and university collaborations that help current and new workers expand their skillsets.
Pennsylvania is already demonstrating our commitment to our businesses’ success. In 2016, Governor Wolf successfully secured critical funding to support business development efforts — recapitalizing Business in Our Sites (BOS) to create pad-ready sites, and establishing the Pipeline Investment Program (PIPE), to enable Pennsylvanians to access their own abundant supply of low-cost natural gas.
Through these commitments, we will help reinvent the next era of business innovation and growth and play a role in a transformative industry whose success relies heavily on our resources and our strategies surrounding their use. Stay tuned for exciting news with a special follow-up blog entry focusing on petrochemicals and plastics manufacturing and how our abundant natural gas resources are creating new opportunities across Pennsylvania.
Continue to stay up-to-date with all of Pennsylvania’s latest news by signing up for our monthly newsletter or following us on Twitter or LinkedIn. To learn more about the Royal Dutch Shell chemical plant, visit our Shell industry webpage.