PITTSBURGH— Royal Dutch Shell PLC gave the long-awaited go-ahead to a multibillion-dollar petrochemical plant that is expected to give a lift to Pennsylvania and the struggling shale-gas industry.
The company first announced in 2012 that it was considering building a plant about 30 miles north of Pittsburgh in a faded industrial area along the Ohio River once lined with steel mills. The plant is expected to create 6,000 construction jobs and 600 permanent jobs and draw chemical companies and other manufacturers to the region.
The news was welcome in a state that has been hard hit by low energy prices, causing several thousand layoffs and a squeeze on local government revenues. The number of drilling rigs operating in Pennsylvania fell to 14 last week, down from more than 140 in early 2011, according to an industry official.
Pennsylvania Gov. Tom Wolf, a Democrat, called the plant “game-changing” and said it would give a much-needed economic boost to the entire state.
He thanked his predecessor, Republican Tom Corbett, who had initially courted the company which chose Pennsylvania over Ohio and West Virginia.
“This is a foundational investment,” Gov. Wolf said in an interview. “This should mean a lot of great new manufacturing jobs—and change the shape of Pennsylvania’s economy.”The presumptive GOP presidential nominee is very, very clear on fracking.
Known as an ethane cracker, the plant will convert enough natural gas from the region’s Marcellus and Utica shale formations each year to create 1.6 million metric tons of polyethylene, a core component for plastics used in food packaging and containers to automotive parts.
Meanwhile, being reported in multiple locations, BASF puts kabosh on proposed propylene plant in Texas:
BASF SE, the world's largest chemical producer, said on Monday it would refrain for now from building a propylene plant in Texas because of volatile commodity prices, a sign that an aggressive U.S. Gulf Coast petrochemical building boom announced earlier this decade could be cooling.
Falling oil prices in the past two years have eroded the profitability of some chemical plants, which typically prefer to have a wide spread between prices for oil and the natural gas they process. With oil prices down more than 50 percent from 2014 highs, BASF decided that now was not the best time to begin construction of a methane-to-propylene plant in Freeport, Texas. Methane is a key component of natural gas.And more:
The cancellation comes as Dow Chemical Inc recently brought online a similar plant and Enterprise Product Partners LP and Formosa Plastics Corp have plans to open similar plants during the next two years.
Nearly $50 billion in petrochemical projects have been announced in Texas over the last decade, with many companies eager to capitalize on the surge in domestic oil and gas production. LyondellBasell and Exxon Mobil Corp are among some of the largest companies to announce construction plans. BASF's announcement could dent the region's economy, which has been helped in part by chemical plant construction activity that partially offset job losses in oil exploration and production since prices cratered in mid-2014.This BASF project was first announced in March, 2015, and would have been BASF's largest single-plant investment to date.