Developers Put Indefinite Hold on Ohio Cracker Plant
Plans for a second ethane cracker plant in the Appalachian Basin are on hold, after the developer of a proposed facility in Belmont County, Ohio, announced April 27 that it is delaying a final investment decision indefinitely.
A statement from PTTGC, a Thailand-based company that has collaborated with Daelim, a South Korean chemical company on the proposed project, cited uncertainties surrounding the COVID-19 pandemic.
“While, due to circumstances beyond our control related to the pandemic, we are unable to promise a firm timeline for a final investment decision, we are working hard toward that decision. We pledge that we will do everything within our control to make an announcement as soon as we possibly can with the goal of bringing jobs and prosperity to the Ohio Valley,” the press release states.
The company had previously said it hoped to make the decision by June 30, after years of study and planning for the project. It would be a facility similar in size to the Shell cracker plant being built in Beaver County, Pa., and would represent an investment of almost $6 billion just across the Ohio River from West Virginia’s northern panhandle. It could also mean a big boost for the Ohio Valley area, which has lost significant manufacturing jobs. Just last month, PTTGC announced it had reached an economic development agreement with schools and local governments.
However, even as the economic development agreement was announced, some analysts were raising concerns about whether the Ohio plant would move forward, and whether the buildout of the petrochemical industry in Appalachia will occur, due to negative market conditions that have been exacerbated by the coronavirus pandemic and move away from plastics.
A cracker plant converts molecules of ethane, a natural gas byproduct, into ethylene and polyethylene, from which plastics, resins, solvents, and other industrial products are made.
JobsOhio, the state’s private economic development organization, has given the developer $50 million in grants. The developer has completed the first phase of site preparation work and obtained environmental permits.
A recent study by the Institute for Energy Economics and Financial Analysis determined that the project faces significant risks and said the financial outlook is dim. The IEEFA is a philanthropically funded group that conducts global research and analyses on financial and economic issues related to energy and the environment in order to accelerate the transition to a sustainable energy economy.
The study reasons that with many natural gas companies facing severe financial pressures, due to oversupply, low prices, and a lack of capital, the risk for bankruptcies is rising, and could threaten PTTGC’s access to a ready supply of feedstock. The economic uncertainties created by the pandemic have added to those concerns.
Construction at the Shell plant in Beaver County just restarted on a limited basis after being shut down due to the pandemic. When it becomes operational, it may provide some insight into the region’s petrochemical future in the wake of continuing financial pressures, oversupply, and environmental concerns.
“Despite the COVID-19 pandemic, a world-scale petrochemical complex in Ohio remains a top priority for the PTTGC America-Daelim Chemical USA partnership,” the press release states. “While there are factors resulting from this health crisis that have kept us from acting as quickly as we would like, we continue to move as quickly as we can.”