Shell’s new 1.6 million tonne annual polyethylene plant comes on stream; US refiners say they are working on new capacity; Argentina-based Pampa Energia Says Higher Petrochemical Prices Boost Sales | Reuters Events

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Shell’s new 1.6 million tonne polyethylene plant comes online

Shell Chemical Appalachia, a Shell subsidiary, announced on Nov. 15 that it had “commissioned” its plastic resin project in Pennsylvania with a polyethylene capacity of 1.6 million tons per year and at full running rates on schedule for the second half 2023

“The construction of this world-class facility is a fantastic achievement of which the team can be proud. it is a showcase of Shell’s expertise in project delivery,” said Huibert Vigeveno, Shell’s downstream director. The facility is 30 miles from Pittsburgh.

The facility is the first large-scale resin project in the Northeast based on ethane from shale deposits in this region, which are abundant thanks to the nearby Utica and Marcellus Basins.

Shell has said its location within a 700-mile radius of 70% of the US polyethylene market could offer a geographic market advantage. Currently, most of the resin production in the US Gulf Coast is shipped north by rail to supply plastics processors in that region.

No information on the costs

Shell began construction of the complex in April 2017, which will convert ethane into ethylene and then polymerize it into polyethylene resin, commonly seen in the form of supermarket bags or shampoo containers.

The statement said the facility “is the first major polyethylene production complex in the Northeastern United States.”

The statement did not provide any information about the final construction costs.

Around 2019, some sources had estimated that it could be anywhere from $6 billion to almost $10 billion when all related pipeline work is factored in.

While it is true that most of the new large-scale plastic resin manufacturing capacity in the United States in recent decades has been built on the US Gulf Coast, the world’s petrochemical industry originated in the Northeast.

The world’s first petrochemical plant was founded in Clendenin, West Virginia in 1920 and one of its products was precisely polyethylene. Union Carbide mill production included ethylene, oxide glycol, alcohols and olefins.

Another project in the region that has been under consideration for several years is owned by Thailand’s PTTGC and is located in Ohio. An FID for this project is still possible.

The eastern Ohio project is similar in that it plans to develop abundant shale deposits in this region of the country to produce polyethylene.

The PTTGC plant would be located on the Pennsylvania border, up the Ohio River from Beaver County, Pennsylvania where the Shell plant is located.

Some market sources had speculated that completing Shell’s work could free up workers already experienced in building a cracker and polymerization plant, possibly also for the PTTGC project.

Shell completed construction in early August 2022.

US refiners say they are working on new capacity

U.S. companies, grouped under the American Fuel and Petrochemical Manufacturers Association, said in a statement Nov. 15, 2022 that there are plans to add capacity to alleviate shortages that are contributing to relatively high fuel prices in 2022 have, as well as to create more energy security.

“Planned refinery construction and ongoing expansion projects will replace capacity lost during the pandemic. But these projects will take some time to get online,” it said in a statement. And even after ongoing expansions are complete, parts of the US could continue to see shortages, she added.

“Several refinery expansions are underway in the US Gulf Coast region that will increase daily capacity by nearly 350,000 barrels. However, due to the location of these projects, the Northeast and West Coasts of the United States will continue to face the same challenges when it comes to finding economical ways to secure and transport fuel products to meet regional demand,” the statement said .

The association took the opportunity to call for policies favorable to pipeline construction.

“A strategy to improve transportation policies and encourage and expand US pipeline projects and other infrastructure at competitive prices would better position these regions and the consumers who live there,” the association said.

There is a need for additional distillate capacity that refiners want to meet. “Diesel stocks in the US and around the world are low and there are growing concerns about what tight stocks could mean heading into a cold winter,” the statement added.

The organization dates back to 1902 when the National Petroleum Association was formed to represent oil refiners in Pennsylvania (where the first crude oil well was completed in the US) and Ohio.

After forming alliances with other regional associations, the guild became the National Petrochemical and Refiners Association in 1998, taking its current name in 2012.

US fuel makers have seen larger margins in 2022 after capacity cuts since the Covid-19 pandemic.

US refining capacity as of January 1, 2022 was 17.9 million barrels per day, down 1% year-on-year. It was the second straight year that refining capacity declined, the US Energy Information Administration said in a June 2022 report.

Argentina’s Pampa Energia benefits from higher petrochemical prices

Pampa Energia, a participant in Argentina’s power and gas business, including downstream, said on November 7 that higher petrochemical prices contributed to its third-quarter 2022 earnings.

The company reported a “17% year-on-year increase in sales and reported sales of $507 million in the third quarter of 2022, explained by seasonal peaks in natural gas and higher prices in petrochemicals (…)”

“Excellent operational performance in natural gas and oil production (+20% and +14% year-on-year respectively)” also helped, it said.

Pampa reported a year-over-year decline in the volume of petrochemicals sold to 120,000 tons. However, the average price rose 34% to $1,496 per tonne, the company said.

In 2021, Pampa Energia sold a total of 57,000 tons of styrene, propylene and ethylene, as well as 49,000 tons of synthetic rubber and 58,000 tons of polystyrene.

Based in Buenos Aires and led by CEO Gustavo Mariani, the company is owned by an Argentina-based investment fund.

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