Thursday, December 04, 2014MONACA, Pa. -- A metal storage barn, a pair of smokestacks that rise 200 feet, and the remnants of several old production buildings are all that’s left of what once was Horsehead Corp.’s zinc manufacturing complex on the southern bank of the Ohio River here.
On a cloud-covered day in November, a single backhoe operator is busy performing demolition work here, navigating between piles of twisted metal and debris to clear way for what the region believes will one day become a huge petrochemical factory that employs hundreds.
“My role is to think about what the site could be, not what the site was,” says Todd Whittemore, who leads Shell Chemical LLC’s process design and operations team. Two years ago, the energy giant announced that it selected the former Horsehead complex as its preferred site to construct an ethane “cracker” plant -- a project with an estimated investment of between $2 billion and $4 billion.
To illustrate his vision, Whittemore cues a large slide projected behind him of a Shell cracker plant in Singapore, a plant he says would likely mirror the Monaca operation. The nighttime photo shows a massive collection of tanks, pipelines and towers flushed in bright light. It looks more like a small, sleek futuristic city more than a chemical plant.
“I was in Singapore for a decade. We went through the same process, thinking about what we wanted to build,” Whittemore told an audience of 200 during a recent informational meeting Shell hosted in nearby Midland, Pa. “I really look forward to doing the same thing here.”
Shell has yet to commit to building anything in Monaca, company executives say. However, the company has exercised its option to purchase the Horsehead site and parcels near it. Meanwhile, Shell expects to start remediation work on the land in preparation for construction.
“The site is almost clear now,” Whittemore says. “We’re at the phase where we can actually start building the site as opposed to deconstructing the site.”
The Appalachian region has emerged as a hot spot for potential petrochemical projects, and Royal Dutch Shell is just one -- albeit the largest -- of at least three suitors vying for position in this part of the country.
Brazilian energy companies Odebrecht and Braskem are contemplating building a $3.8 billion ethane cracker in Wood County, W.Va., while the startup firm Appalachian Resins is considering a site in Monroe County, Ohio, for a smaller operation.
These companies are drawn to the region by a single magnet: trillions of cubic feet of natural gas that can be tapped in the Marcellus shale plays in Pennsylvania and West Virginia and the Utica shale play in eastern Ohio.
Ethane, one of the liquid gases found in the Utica and portions of the Marcellus, especially in southwestern Pennsylvania, is the major feedstock for cracker plants such as those proposed for the region.
The plants use a process that “crack” ethane molecules, that is, breaks them into ethylene, and transforms that material into polyethylene resin pellets -- the base ingredient for thousands of products.
Moreover, these projects stand to create thousands of temporary construction positions and hundreds of full-time jobs.
The plant in Monaca, Shell executives have said, could employ between 450 and 500 full-time permanent workers. And, officials have estimated that a project of this scope could ultimately employ between 6,000 and 10,000 contract workers over the course of its construction -- which could take six years or more.
“There could be 1,000 to 1,500 tradesmen at work at any one time at Monaca,” says Don Crane, president of the Western Reserve Building and Construction Trades Council. Crane and other area council presidents attended a meeting in November hosted by the Beaver County Building Trades that provided a soft timeline on how the project might progress.
Among the first phases is site remediation, he says, a process that might start as early as next spring, but is likely to take at least a year to complete.
“The dirt work is going to happen,” Crane reports. “They’re going to have to move seven million to eight million cubic yards of dirt. That’s an enormous amount to just prep the site.”
Once the site is cleansed, additional infrastructure work would be required before any meaningful construction could begin, Crane says. “Roads, power stations, relocating rail lines -- that’s another eight or nine months on top of the year before construction could even start.”
Given its scale, Crane says, local tradesmen are likely to see some work on the project. “Geography is on our side. There’s just eight miles between the proposed plant and the Ohio line [and southeastern Columbiana County]. Our members would definitely be ready and willing to work in Monaca.”
Randy Armstrong, Shell’s senior environmental adviser, cautions that his company’s purchase of the land and intent to remediate the site in no way means that a decision has been made on whether to build the plant.
“It’s part of the permitting process in Pennsylvania,” Armstrong says. “That property purchase was required to be able to get permits from the U.S. Army Corps of Engineers and the state. That doesn’t mean we’re coming.”
Design work, permits, development plans, remediation plans, construction details, and further negotiations with state and local communities must be in place before any decision is made, Armstrong says.
“The decision will happen when Shell senior management understands all of the benefits associated with doing this project,” he adds.
The same due diligence is underway with Odebrecht and its plans for a cracker plant in Wood County, W.Va., a joint venture with Braskem known as Project ASCENT.
In November, Gov. Earl Ray Tomblin and state Commerce Secretary Keith Burdette met with Project ASCENT executives in Brazil where they were informed that a $150 million pre-engineering phase would begin in early 2015 and take a year or so to complete.
Once that phase is finished, the company would likely make a decision on whether the project is feasible.
Odebrecht purchased the SABIC Innovative Plastics site in Washington, near Parkersburg, for $10.9 million. The deal closed Dec. 31.
Another cracker plant initially proposed for West Virginia has since been repurposed for Ohio in Monroe County, in the southern tier of the Utica shale.
Appalachian Resins, based in Houston, looks to spend $1 billion to build a cracker plant on the Ohio River, and negotiations are in the works to lease property near Clarington, says Jason Hamman of Hamman Consulting, which advises Monroe County on economic development projects.
“We’re doing our due diligence on the property,” Hamman says, which encompasses about 50 acres along the river. The plan is for the Monroe County Port Authority to purchase the land and lease it to Appalachian Resins. Once in operation, the plant would employ between 200 workers.
The land proved attractive because of rail, barge and highway access, Hamman says. These projects take a lot of work and a lot of time to complete, he notes, citing the pace of the Shell project.
“Appalachian Resins made the announcement at the end of August and we’ve accomplished a lot in the past few months,” he says. “We’ll see.”
Pictured: Shell Chemicals has purchase the former Horsehead industrial property along the Ohio River in Monaca, Pa., its preferred site for the proposed cracker plant.
Copyright 2014 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our twice-monthly print edition and to our free daily email headlines.