Shell Getting Ready to Let the Ethane Flow
Less than two months after a subsidiary of Shell Oil announced plans to build an ethane cracker plant in Monaca, PA, the company announced on August 17 that a pipeline will be constructed in order to send ample amounts of that gas to the new facility.
The Shell Pipeline Co.’s structure will span three states (Pennsylvania, West Virginia and Ohio) and 94 miles of land. It’s derived from the massive Utica and Marcellus shale reserves that takes advantage of the rich natural gas reserves underground, though the main product to be produced here will be polyethylene.
Construction on the project isn’t expected to start for another two years. However, this entire project has been an exercise in patience, as well as a huge investment, for the parent company.
Back in 2013, Shell paid approximately $4 million just to extend a land option on the site in question-a former zinc plant. One year later, the company paid roughly $107 million for the land itself, some surrounding property and to pay for contamination clean-up. The bulk of that cost came from the latter aspect, estimated at $80 million. That cost pales next to the amount needed to build the cracker plant, with one report offering a wide range of anywhere from $2 billion to three times that amount.
The site was chosen in order to link three key areas where the ethane could be sourced, with Shell expecting the early capacity to yield over 100,000 barrels of ethane per day. In addition, seven out of every 10 customers for the company‘s polyurethane are within 700 miles, with more plastics manufacturers likely to be lured to the area in the coming years. The yearly amount of polyurethane will increase by nine percent the amount of metric tons sold by Shell.