Tag: Petrochemical Plants

Report: Predicted Ohio Valley Petrochemical Hub Never Materialized

Proposals to build two ethane cracker plants – one in Wood County, West Virginia, and another in Belmont County, Ohio – have fizzled.

A petrochemical manufacturing hub predicted six years ago in the mid-Ohio Valley didn’t materialize.

Proposals to build two ethane cracker plants – one in Wood County, West Virginia, and another in Belmont County, Ohio – have fizzled.

Cracker plants produce the building blocks of plastic products. In 2017, the chemical industry and the Trump administration predicted that the Ohio Valley, with its proximity to shale gas reserves, would become a hub for that process.

But according to a new report from the Ohio River Valley Institute, that hub never happened, nor did the 100,000 jobs it promised for the region.

Only one plant was built by Shell in Beaver County, Pennsylvania. It employs 400 to 600 people.

According to the report, competition from China and a build-out of petrochemical manufacturing on the Gulf Coast discouraged investment in the Ohio Valley hub.

Drilling Permits Cancelled For Underground Natural Gas Storage Project

Ohio environmental regulators have canceled key permits needed for an underground natural gas liquids storage facility proposed along the Ohio River.

According to an order from the Ohio Department of Natural Resources, permits to drill three three Class III solution mining wells in Monroe County, Ohio were cancelled on Sept. 21. Cancellation was requested by Powhatan Salt Company LCC. The proposed wells are associated with the Mountaineer NGL Storage project, a multi-million dollar underground natural gas liquids storage project.

Experts say natural gas liquid storage — like the proposed Mountaineer project — is crucial to building out the Ohio Valley’s petrochemical industry.

In July, Mountaineer finalized an agreement with the developers of a proposed petrochemical plant in nearby Belmont County, Ohio. The plant would use natural gas liquid ethane to produce the feedstock for plastics and chemicals. Earlier in July, one of the plant’s investors pulled out of the project. Last week, the plant’s developers signed a contract with gas supplier Range Resources to provide the yet-to-be-built plant with ethane feedstock.

A coalition of environmental groups challenged Powhatan’s drilling permits arguing ODNR did not follow proper administrative procedure before issuing them.

The groups include Concerned Ohio River Residents, FreshWater Accountability Project, Buckeye Environmental Network, Ohio Valley Environmental Coalition and the Sierra Club.

In a statement, Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis, an energy finance think tank, characterized the request by Powhatan to cancel the permits as a signal the project may be in jeopardy.

“This is a solid market signal that plans for a petrochemical buildout in Ohio and western Pennsylvania are on shaky ground,” he said. “Local and state economic development officials would serve the public better by looking for jobs and taxes in other areas of the economy that are actually profitable and growing and can be good neighbors to the communities that host them.”

According to the ODNR order, the company can reapply for the permits.

Investor Pulls Out Of Proposed Belmont County Cracker Plant

Daelim Chemical USA, a major investment partner in a proposed ethane cracker plant in Belmont County, Ohio, across the river from Moundsville, West Virginia, announced on Tuesday that it is exiting the project. 

In a joint statement with PTTGC America LLC, the Thailand-based company driving the project in the Ohio Valley, an executive said that despite Daelim’s withdrawal, the project remains a “top priority.” 

“We are in the process of seeking a new partner whilst working toward a final investment decision,” the head of PTTGC America, Toasaporn Boonyapipat, said. “We look forward to making an announcement by the end of this year or early next year on this transformative project for the Ohio Valley Region. We wish Daelim well and appreciate its contributions to our effort.”

The proposed Belmont County cracker plant has been in the works for a few years and has faced a growing backlash from some in the local community who fear the project could fuel a new petrochemical industry that could be harmful for the climate and health and safety of residents. 

In 2018, Daelim announced it was partnering with PTTGC America on the project. The companies purchased 500 acres of land along the Ohio River in Dilles Bottom, where a coal-fired power plant once operated. 

If constructed, the plant would take ethane — a product of natural gas — and produce up to 1.5 metric tons annually of ethylene, a feedstock used in plastics and chemical manufacturing. The plant’s air permit estimates the cracker would produce the equivalent carbon dioxide emissions of putting about 365,000 cars on the road. 

According to PTTGC America, the project would invest $47.5 million over 15 years in education and other community needs while also generating more than $20 million in sales tax revenue during construction.

In their statement, both companies cited the economic uncertainty tied to the COVID-19 pandemic, including oil price volatility, as reasons for rethinking the investment in the Ohio Valley. 

A recent report by the Trump administration found expanding the Ohio Valley’s petrochemical industry could be an unprecedented source of economic opportunity and growth when the county, and region, eventually emerge from the COVID-19 pandemic. 

However, recent analyses by the Institute for Energy Economics and Financial Analysis, a think tank whose mission is to accelerate the transition to a diverse and sustainable energy economy, found changing market conditions, exacerbated further by the coronavirus pandemic, call into question the economic viability of petrochemical investments in the Ohio Valley, including Shell’s Monaca cracker plant, currently under construction near Pittsburgh in Beaver County, Pennsylvania.

 

Competing Reports Offer Different Outlook On Ohio Valley’s Petrochemical Future

A new report by the Trump administration suggests the Ohio Valley’s growing petrochemical industry could be an unprecedented source of economic opportunity and growth when the county, and region, eventually emerge from the COVID-19 pandemic. But the assessment is drawing criticism from environmental groups and some financial analysts that warn the risk is growing for plastics and petrochemical manufacturers. 

The Department of Energy assessment released Tuesday makes the case that natural gas production in the region, which includes parts of West Virginia, Ohio, Pennsylvania and Kentucky, will continue to grow in the coming decades. The report argues the region is on the “cusp of an energy and petrochemical renaissance” due to the fact that gas extracted from the region is rich in natural gas liquids, including ethane, the building block of many plastics and chemicals, and the Ohio Valley’s proximity to the bulk of downstream manufacturers. 

“The trifecta of potential growth in energy, petrochemical manufacturing, and other energy intensive and advanced manufacturing brings the promise of a renaissance to the Appalachian region,”the report states. 

The 75-page document was commissioned under president Donald Trump’s April 2019 executive order “Promoting Energy Infrastructure and Economic Growth.” Six additional federal agencies and the Appalachian Regional Commission contributed. 

Although the report recommends continued support and investment from federal, state and local governments, it places the onus on the private sector to lure new petrochemical and manufacturing plants. Private investment has been negatively affected by the pandemic’s economic effects. 

The Trump administration has been a stalwart supporter of boosting the region’s petrochemical industry. The president toured Shell Chemical’s soon-to-be completed ethane cracker complex in Monaca, Pennsylvania, last August. 

Officials in the region have been working on the so-called Appalachian Storage and Trading Hub for nearly a decade. The natural gas storage hub cleared its first major hurdle in 2018 when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan. A previous DOE report, requested by lawmakers in Congress, found the hub is crucial for growing the region’s petrochemical industry. 

Financial Risk

Sarah Carballo, a communications specialist with the Ohio Valley Environmental Coalition, a regional advocacy group, said the new DOE report did not take into account the growing financial risk associated with a regional petrochemical industry buildout, or the concerns of some residents in the region. 

“Communities across Appalachia deserve viable, fair and sustainable economic transition strategies that protect public health and environmental quality,” she said. “So, instead of investing in petrochemicals and coal as a basis for economic renaissance — industries that poisoned our land, air, water, communities — we think it’s time for our leaders to explore more feasible and sustainable economic development strategies that provide long term prosperity for the people of our region.”

An analysis released last month by the Institute for Energy Economics and Financial Analysis (IEEFA), a think tank whose mission is to accelerate the transition to a diverse and sustainable energy economy, painted a much less rosy picture for the Ohio Valley’s budding petrochemical industry. 

The report focused on Shell’s petrochemical complex currently under construction near Pittsburgh in Beaver County. Once completed, the facility will include an ethane cracker and polyethylene production complex slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers, according to the company. 

The IEEFA analysis found changing market conditions, exacerbated further by the coronavirus pandemic, call into question the economic viability of Shell’s cracker plant and other investments in the Ohio Valley. For example, the prices of plastics have dropped from around $1 per pound from 2012-2016 to roughly half that today. 

On Wednesday, IEEFA’s director of finance, Tom Sanzillo, said recent disclosures by Thailand-based PTT Global Chemical America regarding its proposed petrochemical plant planned in Belmont County, Ohio, show that the project is also facing similar financial risks. 

State officials in Ohio have provided millions of dollars in grants and other economic incentives to the facility, which was first proposed in 2013. In a recent press release, the company pushed back its final investment decision by six to nine months. 

Settlement Reached Over Proposed Ohio Cracker Plant Air Permit

Environmental groups have reached a settlement agreement with a petrochemical company  in Ohio to beef up air pollution controls at a proposed petrochemical plant along the Ohio River. 

 

Thailand-based PTT Global Chemical America and South Korea-based Daelim Industrial Co. have proposed building a multi-billion dollar ethylene cracker plant on a 500-acre tract of land in Belmont County, Ohio, just a few miles from Moundsville, West Virginia.  

The plant would crack apart ethane — which is produced during natural gas fracking — into smaller molecules used in plastics and chemical manufacturing. The plant would produce an estimated 1.5 million tons of ethylene annually.

An air permit issued by the Ohio Environmental Protection Agency last December allowed the plant to emit 400 tons of volatile organic compounds and produce the equivalent carbon dioxide emissions of putting about 365,000 cars on the road annually. 

Three environmental groups, the Sierra Club, Freshwater Accountability Project, and Earthworks, challenged the air permit in January arguing pollution from the plant could harm communities and that the air pollution controls mandated by Ohio EPA were not sufficient. 

The settlement signed Monday requires the company to use technology to find pollution leaks and repair them. The company would also install a weather station on site and create a website available to the public with emissions data. 

In a statement, environmental groups praised the improvements, but remained opposed to the plant, which would be the second such facility in the region. About 30 miles northwest of Pittsburgh, Shell Chemical’s Monaca cracker plant is under construction. It’s slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers when done, according to the company.

“This agreement will help protect local communities from dangerous air pollution should this facility be built, and we’ll continue to fight to ensure that it never comes to that,” said Sierra Club Organizer Cheryl Johncox. 

Federal Support

A final investment decision by the project developer has not been made. Proponents envision the Ohio Valley as the next hub for plastics and petrochemical production, which they argue could drive investment and jobs to the region. 

The Marcellus and Utica shale formations located in the Ohio Valley contain high levels of natural gas liquids, or NGL, which can be separated from their cousin methane to become valuable feed stocks for plastic and chemical production. A2017 U.S. Department of Energy report found U.S. NGL production in the region is projected to increase over 700 percent in the 10 years from 2013 to 2023. 

Last month, President Donald Trump toured the Shell cracker plant. In a wide-ranging speech to workers, he expressed his administration’s commitment to supporting an Ohio Valley petrochemical buildout.  

In July, a top Department of Energy official testified in front of members of the West Virginia Legislature that the federal government is prioritizing expanding the petrochemical industry in Appalachia.

“Federal efforts are strong and continue to gain momentum,” Steven Winberg, DOE’s assistant secretary for fossil energy, told the Joint Committee on Natural Gas Development. “We also recognize that others are doing a lot and we believe that together we can make this Appalachian petrochemical renaissance happen for the benefit of the industry, the region and the country.”

In addition to concerns over air pollution, those opposed to a petrochemical buildout in the region point to climate concerns. Areport released earlier this year by a coalition of environmental groups estimates production and incineration of plastics in 2019 will add more than 850 million metric tons of greenhouse gases to the atmosphere, or equal to the pollution of building 189 new coal-fired power plants.

The report projected by 2050, emissions from the entire plastics life cycle could account for as much as 14 percent of the earth’s entire remaining carbon budget.

An earlier version of this story incorrectly stated how many environmental groups were part of the challenge. It is three, not four.

DOE Official Tells W.Va. Lawmakers Petrochemical Development is a Top Priority

 

West Virginia lawmakers heard testimony Tuesday from a top Department of Energy official that the federal government is prioritizing building out a petrochemical industry in Appalachia.

 

Speaking in front of the Joint Committee on Natural Gas Development, Steven Winberg, DOE’s assistant secretary for fossil energy, told lawmakers his agency and the Trump administration believe the Ohio Valley is “on the cusp of an Appalachian petrochemical renaissance.”

“Federal efforts are strong and continue to gain momentum,” Winberg said. “We also recognize that others are doing a lot and we believe that together we can make this Appalachian petrochemical Renaissance happen for the benefit of the industry, the region and the country.”

West Virginia, Pennsylvania and Ohio sit on top of some of the country’s largest reserves of ethane-rich natural “wet” gas, which can be processed into the chemical and plastics feedstocks.

According to a2017 U.S. Department of Energy report, U.S. natural gas liquids production in the region is projected to increase over 700 percent in the 10 years from 2013 to 2023. 

Winberg said the federal government is devoting resources into ensuring pipelines, ethane storage and cracker plants are built in the region, including to get final investment in a proposed cracker plant in Belmont County, Ohio.

Thailand-basedPTT Global Chemical, and its partner South Korea’s Daelim Industrial Co., have applied for permits and purchased 500 acres of land in Dilles Bottom, just a few miles from both Shadyside, Ohio, and Moundsville, West Virginia, just across the Ohio River. About 30 miles northwest of Pittsburgh, Shell’s Monaca cracker plant is already under construction. It’s slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers when done, according to the company. 

Winberg urged West Virginia lawmakers to invest now in preparing sites for possible cracker development. 

“What we need, ladies and gentlemen, is one of these crackers in West Virginia,” he told the committee. “These crackers are the anchor facilities that will drive job growth in this region.”

 

The American Chemistry Council estimates the hub  could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.

 

Gov. Jim Justice in January said the development of underground natural gas liquids storage, or the so-called Appalachian Storage and Trading Hub, is his office’s “number one economic focus.”

 

On the hub, Winberg said it’s a top priority for the Trump administration.

 

“At DOE we have a full court press on this,” he said.

 

Environmental groups feverently oppose this kind of development. Dustin White with the Ohio Valley Environmental Coalition said bringing the petrochemical industry to the region would subject residents to public health, environmental and climate impacts with limited economic benefits. 

He argued automation would likely replace the need for human workers at the majority of these facilities, and he likened a petrochemical future in Appalachia to what has already occurred in the Gulf Coast. Louisiana and neighboring states are currently home the bulk of the nation’s chemical and plastics industry, and dubbed by some as “cancer alley” due to high levels of cancer and other diseases. 

“Once again the human health impacts and safety were not brought up,” White said of Winberg’s presentation. “From my perspective, it’s all false hope.” 

He urged lawmakers to invest public tax dollars instead in renewable energy and other non-fossil fuel-based industries, especially as an increasing number of cities and nations ban the use of single-use plastic, which would be a central end product of the proposed Appalchian petrochemical buildout.

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