Thanks to Soaring Utica Production, New $5.7 Billion Ethane Cracker Coming to Belmont County

The CEO of the Thai chemical company, PTT Global Chemical Public Company Ltd paid a visit to Columbus, Ohio last week to announce plans to construct a proposed $5.7 billion ethane cracker plant in southeastern Ohio. The first phase of the project will require $100 million over the next year to be spent on engineering and design – this will lay the groundwork for a four-year buildout along the Ohio River in Belmont County. The processing plant will support the record-breaking natural gas production coming out of Ohio, as it will allow a component of the natural resource, ethane, a component of natural gas, and “crack” it into ethylene, a feedstock source to the petrochemical industry.

News that this investment will be in Belmont County is consistent with natural gas production results, where the second quarter of 2015 saw record-breaking production at 221,860,169 Mcf (222 billion cubic feet) of natural gas. In fact, the top 10 best producing natural gas wells are all located in Belmont County.

Capturing the ethane from natural gas and processing it into a feedstock source is critical to Ohio’s Utica Shale development. Ethylene is the root petrochemical for resins, plastics, adhesives, and synthetic products used in practically every aspect of our lives. EID’s infographic below shows the extent to which natural gas is a feedstock for American’s manufacturing industry:

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Recently, the Boston Consulting Group found that average costs of manufacturing goods in the United States are currently only 5 percent higher than in China. It projects that by 2018, costs will be 2 to 3 percent lower in the U.S. than in China.  Remember, China has long been described as the “manufacturing powerhouse,” or “manufacturing’s shining star,” or “the world’s factory floor.”

But as a Fortune article explains:

Made in the U.S.A.’ is becoming more affordable. The reason? Fracking. [Emphasis added.]

Thanks to abundant affordable natural gas, the plastic industry has not only recovered from the recession, but it’s expected to grow by more than 20 percent over the next decade. According to Steve Russell, vice president of the American Chemistry Council’s plastic division:

The ready availability of large amounts of natural gas is giving the U.S. plastics industry really a renaissance, turning it from among the highest-cost producers to one of the lowest in the world, increasing manufacturing in the United States, increasing exports to markets that we were not exporting to before, and along with all that comes jobs.

Hydraulic fracturing and manufacturing has been creating family sustaining jobs in states that support the development of their shale resources. To speak to this very point, and the impact of the $5.7 billion cracker in Ohio, Larry Merry, Executive Director of the Belmont County Port Authority, stated, “This is the type of project that allows moms and dads to buy baseball gloves and dance lessons.” President of the Belmont County Board of Commissioners, Mark Thomas, also emphasized the magnitude of this announcement stating “This investment is one of the largest in the history of the State of Ohio.”

Ohio’s Representative for the region, Congressman Bill Johnson, added yesterday:

For far too long, we have been a forgotten region of the state, and this project is evidence that this is changing. This ethane cracker would be a game-changer for our region, and while there is still much work to be done, I look forward to continuing to work with the various state agencies, local officials, work force and labor groups, and the hardworking people of Eastern and Southeastern Ohio to bring this important project to fruition. The instincts of PTT and their Japanese partners, Marubeni Corporation, are right; Ohio is truly the heart of America’s energy renaissance.

The announcement is just one more piece of good news for economic development to support Ohio’s Utica Shale.

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