One of the most important investments in the Marcellus Shale development is a major project outside Pittsburgh that will turn the region’s abundant natural gas into useful chemicals, and the project has received a major break in the ongoing trade wars. Shell Chemical Appalachia, a division of the Royal Dutch Shell supermajor oil company, is spending somewhere around $6 billion to build an ethane cracker plant. This plant will break apart ethane, a type of natural gas, to form polyethylene. In turn, polyethylene is made into a wide variety of products like packaging, tubing, milk jugs, and garden furniture.
Building an ethane cracker requires a lot of steel, and Pres. Trump recently put a 25% tariff on steel imports and also imposed quotas on steel imports from Argentina, Brazil, and South Korea. Shell was set to import much of its steel from Brazil, and it looked like Pres. Trump’s policies could be a major hurdle. The plant was given an exception, however, and it will reportedly now be able to continue construction without delay. The process for granting the exception is somewhat opaque, but it is not hard to imagine why cracker plant was given special treatment.
This Shell cracker plant is important because it will be the first one built anywhere in the U.S. outside the Gulf Coast in the last 20 years. The Appalachian region continues to be the driving force behind the growth of U.S. natural gas supplies. To be specific, U.S. Energy Information Administration data shows that the region was producing a negligible amount of natural gas in 2007, and by July 2018 it was producing about 29% of the country’s gas. No other region has seen production grow as quickly.
It is important to continue to find new uses for all that gas so that the Marcellus can continue its growth. Cimmaron Land has led the way in helping E&P companies find land opportunities in the area, and if you are interested in getting involved we encourage you to contact us today.