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Officials in Pa., W.Va., Ohio hope cracker plants get commitment, go into production | TribLIVE.com
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Officials in Pa., W.Va., Ohio hope cracker plants get commitment, go into production

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Keith Hodan | Tribune-Review
Site preparation and road work continue Dec. 11, 2015, along Route 18 in Beaver County at the site of Shell’s potential ethane cracker.
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Tribune-Review
Construction continues Friday, Dec. 11, 2015, on a bridge over Route 18 in Beaver County at the site of Shell's planned ethane cracker.
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Tribune-Review
Shell's planned ethane cracker plant under construction in 2016 along Route 18 in Beaver County.
PTRCRACKER02121415
Tribune-Review
Construction continues Friday, Dec. 11, 2015, along Route 18 in Beaver County at the site of Shell's planned ethane cracker.
PTRCRACKER04121415
Keith Hodan | Tribune-Review
Site preparation and road work continue Dec. 11, 2015, along Route 18 in Beaver County at the site of Shell’s potential ethane cracker.
PTRCRACKER05121415A
Tribune-Review
Construction continues Friday, Dec. 11, 2015, on a bridge over Route 18 in Beaver County at the site of Shell's planned ethane cracker.
PTRCRACKER03121415
Tribune-Review
Shell's planned ethane cracker plant under construction in 2016 along Route 18 in Beaver County.
PTRCRACKER02121415
Tribune-Review
Construction continues Friday, Dec. 11, 2015, along Route 18 in Beaver County at the site of Shell's planned ethane cracker.

With companies spending hundreds of millions in 2015 on planning for two potential petrochemical plants along the Ohio River, officials in three states hope 2016 is the year that billions of dollars are committed to their construction.

The recent crash in natural gas and related products’ prices cast some doubts on whether decisions on building the so-called ethane crackers will come soon.

Proponents of Royal Dutch Shell’s proposed complex in Beaver County and PTT Global Chemical’s possible cracker in Belmont County, Ohio, can point to plenty of recent positive developments.

Shell this year closed on the property in Potter, landed key environmental permits, began an $80 million remediation of the former Horsehead Corp. zinc smelter site and started building an access bridge over Route 18. PTT commissioned $100 million in studies to examine the feasibility of building at a shuttered power plant across the river from Moundsville, W.Va.

Whether either company makes a final decision on building in 2016, though, will require getting a handle on global commodity markets that became more volatile this year.

“These companies are trying to make decisions on what market conditions will be … three to five years from now,” said David Mustine, senior managing director for shale energy and petrochemicals at JobsOhio, a workforce and economic development group in Columbus.

Both plants would take ethane — a component of the gas that comes from some Marcellus and Utica shale wells in Western Pennsylvania, Northern West Virginia and Eastern Ohio — and convert or “crack” it under high heat into ethylene and polyethylene, the building blocks of many common household products and plastics.

Ethane prices plunged with the glut of natural gas this year, which would make it cheaper for Shell or PTT to make those building blocks. But so did the price they could get for the petrochemicals.

The overall slowdown in the energy industry hurt manufacturers that rely on it for business. The drop in natural gas and oil prices also means Shell, as a producer of both fuels, has less money to invest.

“Some of the manufacturers and companies who stand to benefit most from locating a cracker in this region have been hit hardest by the low gas prices,” said energy consultant Kathryn Klaber of the Sewickley-based Klaber Group, who formerly led the Marcellus Shale Coalition.

Getting one or two crackers along the Ohio River is more likely if oil, gas, and related petrochemicals hit what Klaber called a sweet spot where companies on both the production and consumption sides “can benefit from fair, long-term, reasonable prices.”

The governors of all three states recently pledged to work together to convince at least one company to build, and to attract downstream manufacturers that would see value in buying cheap polyethylene locally instead of shipping it up from Gulf Coast crackers.

All three states can supply the ethane and benefit from its conversion here, Klaber and Mustine said. And that supply isn’t going anywhere soon, even as exports increase.

A recent study by Cleveland State University researchers predicted that in 2020, shale gas companies will produce 200,000 barrels a day of ethane above what can be processed and moved out on pipelines, enough to feed four crackers.

“This excess production should be attractive for petrochemical companies locating or considering a location” in the region, the study’s authors wrote.

David Conti is a staff writer for Trib Total Media.

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