WSJ: Penn. can’t compete with Gulf Coast in plastics manufacturing

Royal Dutch Shell’s plans for a multibillion-dollar petrochemical plant in Pennsylvania remain just that, although more than a year has passed since the project’s announcement, according to an article in The Wall Street Journal.

The plant would turn ethane, a liquid produced along with natural gas, into ethylene, a chemical used in making plastics. Pennsylvania has offered Shell nearly $2 billion in state tax incentives, but the company has not purchased the proposed plant site, which remains vacant.

By 2020, worldwide demand for plastics is expected to increase by 50 percent to around 224 million tons, according to estimates from ExxonMobil Corp. Pennsylvania’s ethane production is expected to reach 650,000 barrels a day over the next three years. But for now, the state can’t compete with the Gulf Coast’s “massive infrastructure” — millions of barrels of ethane storage and pipelines that feed close to a dozen petrochemical complexes and plastics plants.

And analysts say it may make more sense to pipe the ethane across the country rather than build an all-new plant and the infrastructure in Pennsylvania.

Petrochemical makers have proposed at least nine Gulf Coast projects that would turn ethane into ethylene for plastics. South African energy giant Sasol Ltd. plans to spend as much as $21 billion to build an ethane cracker and a facility that will turn natural gas into diesel in the Lake Charles area. And the state is negotiating to bring two $2 billion ethane crackers to Louisiana.

Read the Wall Street Journal story here.