Everyone declared a winner in ethane cracker war




Perhaps sports culture is to blame for the regional divide — the one-upmanship — that guided how Pennsylvania, West Virginia and Ohio tried to lure large projects to their borders until Shell decided to build an ethane cracker in Beaver County and everyone was declared a winner, said Dave Spigelmyer, president of the Marcellus Shale Coalition.

Before the great reconciliation, it made sense to parade Shell executives onto Heinz Field to meet Troy Polamalu to tout the City of Champions through its Steelers football team.

Now it seems provincial and counterproductive to hail the Pittsburgh region as the ultimate champion in the cracker war.

Everyone’s a winner, said pretty much everyone who talked at the Northeast U.S. & Canada Petrochemical Construction Conference held at the Downtown Marriott last week.

A few hundred economic development officials, lawyers, union leaders and oil and gas industry folks from surrounding states came to the inaugural conference, made instantly popular by a posse of Shell officials who spoke publicly about the ethane plant for the first time since its official announcement last month.

“The competition is pretty much over,” declared Keith Burdette, West Virginia’s secretary of commerce. “We’re not (just) trying to build a facility. We’re trying to build an industry.”

West Virginia is waiting for Brazilian petrochemical firm Braskem and Odebrecht to make a decision on locating a cracker in Parkersburg, while Ohio is expecting word on a possible Belmont County cracker being evaluated by PTT Global Chemical out of Thailand.

The appeal of the region for petrochemical crackers is the ethane, a component of the so-called wet gas abundant in the Marcellus and Utica shales in this part of Appalachia. The plants process or “crack” that ethane into ethylene, which is then made into pellets that form the basis of plastics and other ubiquitously consumed goods. It took the tri-state region more than five years to secure its first cracker, which is estimated to run more than $5 billion. 

Meanwhile, Philadelphia — or “the other tri-state area” — is dusting off its refineries and building more chemical plants to capitalize on the natural gas and liquids coming out of Appalachia.

The message of togetherness was strong at the conference, yet no one was allowed to forget that it was — indeed — Western Pennsylvania that got the multinational chemical super giant in its backyard.

Even Ate Visser, a vice president at Shell, said it wouldn’t have happened but for Pennsylvania’s welcome mat, which included potentially more than $1 billion in tax incentives and a way to cap environmental liability for the former Horsehead zinc smelter site where the cracker will rise over the coming years.

That’s in exchange for 6,000 construction jobs and 600 permanent jobs on site, Shell has promised. There are already around 400 people working on the flattened, 1,000-acre site, Mr. Visser said, and that’s with construction still 18 months away.

“Those jobs don’t stop at the state line,” said Jeff Logan, president of the Pennsylvania Chemical Industry Council. “It’s a regional thing.”

He’s magnanimous now, said Jenn Kelin, president of the Ohio Chemistry Technology Council, but the night before she said Mr. Logan had been “needling me incessantly that they got the cracker.”

“To which I say, you have the cracker but we got LeBron,” Ms. Kelin said. The Cleveland Cavaliers last month finally won a championship behind their intrepid basketball star from Akron.

When the chuckles died down, Mr. Logan added softly: “I’ll keep the cracker.”

In the following session, a presenter flashed a map of the region and covered Pittsburgh with the National Hockey League’s Stanley Cup, tipped on its side and spilling ethane — Shell’s feedstock for the cracker — all over Western Pennsylvania.

On a separate panel, former Pennsylvania Department of Environmental Protection Secretary and Philadelphia-area attorney Mike Krancer marveled that the rift between Pittsburgh and Philadelphia is dissolving in the state’s bounty of natural gas.

The east-west split in the Keystone state, he said, was as dramatic as the great schism between the Byzantine and Roman Churches in 1054 AD.

“If you unify Pennsylvania, you better watch out,” he said, presumably speaking to Texas. “We’re going to put ‘em in our dust.”

Mr. Krancer shared a panel with Phil Renauldi, who proudly wears the moniker “dirty fossil Phil with a heart of shale,” and represents the Philadelphia branch of the expanded area of cooperation.

The chief executive of Philadelphia Energy Solutions, which runs two oil refineries, Mr. Renauldi said the pipelines that carry natural gas from this region to the refineries in the eastern part of the state are “rivers of flowing wealth.”

When someone in the audience wondered if Philadelphia’s expanding energy hub will steal opportunities from Pittsburgh, Mr. Renauldi offered assurances that Philadelphia isn’t competing with Pittsburgh. It’s complementing it.

“It’s all about the market,” he said. “By all means, the things that are easy to supply from the Ohio Valley should be supplied from the Ohio Valley. If you want to export to Western Europe, we do have an ocean there and you don’t.”

Philadelphia also has excellent rail infrastructure, he continued.

In the audience, a Pittsburgh-based attendee mumbled, “Yeah, but do they have a cracker?”

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

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