Plastics manufacturers look to ethane processing plants for benefits
Plastics manufacturers are counting on ethane processing plants tied to natural gas from the Marcellus, Utica and other shale regions in the United States to lift the industry out of its slow-growth pattern.
Oil giant Royal Dutch Shell is considering a Beaver County site for construction of such a plant, and Braskem Inc. proposes one near Parkersburg, W.Va. The low-cost ethane obtained from shale drilling could support scores of plants that make raw plastics, experts say.
Companies that make plastic products — ranging from food packaging, milk jugs and other containers to enclosures for medical and electronic equipment to pipe and interior panels for aircraft and automobiles — would benefit from the processing plants called ethane crackers.
“There is a reasonable likelihood that it would benefit us and larger plants in the region, presumably from downward pricing pressure,” said Chris O’Leary, who owns Kenson Plastics Inc. in Zelienople with his brother David. “Ultimately, that would make our incoming raw materials more stable, in terms of sourcing and pricing.”
Kenson pressure-forms plastic into enclosures for medical devices, cosmetic covers and aircraft panels, O’Leary said. It is one of several companies in the Pittsburgh region that do similar work using polyethylene, a plastic derived from ethane.
Ethane processing plants use chemical processes to convert components of natural gas.
Though Shell hasn’t committed to building, it has said its proposed complex would take ethane from Marcellus gas, crack it in furnaces to produce as much as 1.5 million metric tons of ethylene each year, then process that chemical in a companion plant to make 1.6 million metric tons of polyethylene.
Last week, Shell said it agreed to exercise a purchase option to buy the former Horsehead Holdings Corp. zinc smelter site in Beaver County as it continues to mull a decision on building a multibillion-dollar ethane cracker there.
Polyethylene is the most common plastic used in industry, though other plastics derived from oil can be used for many of the same products. Braskem, Dow Chemical and other manufacturers make polyethylene, polypropylene, polystyrene and polyvinyl chloride, or PVC.
“Companies like that make the first-level beads that go into the extrusion process. A lot of companies on the Gulf Coast are making the beads right out of the cracker,” O’Leary said. “In all likelihood, those kind of plants would move here; that’s the ultimate goal.”
Kenson and other pressure and injection molders — such as McGee Plastics Co. in Marshall and Tri-State Plastics Inc. in Coraopolis — are among the 87 companies in the plastics industry in the Pittsburgh metro area, employing nearly 3,700 people, according to the state Department of Labor and Industry.
Employment in Western Pennsylvania is up slightly from 2011, when 3,533 employees worked at 85 locations. Statewide employment in the industry was 35,813 in March, records show.
Pennsylvania ranked sixth in the nation in plastics employment and with shipments of about $16.6 billion a year, according to the Society of the Plastics Industry Inc., a Washington–based trade association.
David Masilunas, president of the 250-member Pittsburgh chapter and a plastics engineer at Philips Respironics in Murrysville, said the region isn’t known as a hub for plastics because most companies here don’t make raw plastic, which companies obtain from overseas.
“In Pennsylvania, there are a lot of molders and companies that design parts,” Masilunas said. “Bayer, Medrad, Philips Respironics and MSA Safety and others employ engineers who design and specify plastics to be used.”
Bayer’s MaterialScience unit in Robinson makes polycarbonate plastic in Texas and West Virginia for use in CDs, DVDs, food containers and auto headlights.
Moon-based Nova Chemicals Corp.’s plant in Beaver County makes styrene and converts it to polystyrene for foam cups and bowls and packaging.
Nova spokesman Pace Markowitz said the Shell cracker would have little or no impact on Nova.
Philips Respironics relies mostly on polypropylene for its medical devices. Braskem, which bills itself as the largest North American supplier of that plastic, manufactures it in Texas and West Virginia.
Polyethylene could be used as well, Masilunas said.
The prospects of winning business for polyethylene excites Raj Krishnaswamy, director of Braskem’s Innovation & Technology Center in South Oakland, where 50 scientists and technicians conduct plastics research.
“Pittsburgh is the research and development center for Braskem in the United States, with a focus on polypropylene, our main business today,” Krishnaswamy said.
“But in the future, it will include research on polyethylene derived from shale gas as well.”
To do that, Braskem is focused on its proposed cracker and three polyethylene plants near Parkersburg. “If the techno-economic analysis is positive, we hope to start executing our plan next year,” he said. “We could be making polyethylene in 2018-2019.”
The Middle East has been the main source for all the growth and expansion in polyethylene for 15 years because of low-cost oil and natural gas.
Now, “shale gas in North America has become the big story. It is available in abundance and it is less expensive than the feedstock used today,” Krishnaswamy said.
That shifts attention to the United States, where Chevron Phillips, Exxon-Mobil and Dow Chemical have announced plants to build cracker and polyethylene plants on the Gulf Coast.
Braskem is building a cracker complex with polyethylene plants in Mexico, which is nearing completion.
“It’s not a wait-and-see game; it’s happening today,” Krishnaswamy said. “Shale gas is already having an effect.”
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or [email protected].