01162017Mon
Last updateMon, 16 Jan 2017 4pm

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PA Town Approves $6B Shell Ethane Cracker Plant

Potter Township in western Pennsylvania has granted a conditional use permit for a $6 billion petrochemical plant to be built by Shell Chemicals. The location was chosen because more than 70% of North American polyethylene customers are within a 700-mile radius of Pittsburgh, PA. More state and federal permits are required before construction can begin, which is tentatively scheduled for Dec. 2017.

The proposed complex, comprising an ethylene cracker with polyethylene derivatives unit, could begin commercial production early in the next decade. Shell Pipeline says that three new pipelines would also need to be constructed to support the plant. The complex will use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce 1.6 million tons of polyethylene per year.  


$4.17B Canadian Trans Mountain Pipeline Expansion Approved

Kinder Morgan’s Trans Mountain Expansion Project has received its environmental certificate from British Columbia, Canada. The proposed $4.17 billion Trans Mountain Expansion Project would increase the capacity of the pipeline to 890,000 barrels per day. The current capacity of the pipeline is 300,000 barrels per day.

In April 2012, Kinder Morgan announced a proposed expansion of the Trans Mountain Pipeline system between Edmonton and Burnaby. Trans Mountain is planning to begin construction in September 2017, with an in-service date for the twinned pipeline system expected in late 2019. 

New Upstream Oil & Gas Industry Projects to Double in 2017

Wood Mackenzie forecasts the investment cycle will show the first signs of growth in 2017 since 2014 and final investment decisions (FIDs) will double, compared with 2016.

Malcolm Dickson, a principal analyst for Upstream Oil and Gas for Wood Mackenzie, said: "2017 will demonstrate how efficient the oil and gas industry has become; showing projects in better shape all round."

According to Wood Mackenzie's global upstream outlook for 2017, confidence will start to return to the sector, with exploration and production spend set to rise by 3% to $450 billion. Though a corner is being turned, this is still 40% below the heady days of 2014. At the forefront of the revival will be U.S. tight oil. Costs will continue to fall in 2017, though only marginally. But for all the pain of the downturn, a leaner industry is starting to emerge. 

Oil & Gas Companies Boosting E&P Spending in 2017

According to analysts from Barclays, “oil and gas companies are expected to raise exploration and production (E&P) spending in 2017 by 7%, marking the first increase in three years,” Reuters reports.

“Barclays also said it expects North American oil companies to lead the spending growth with a 27% jump. Production, however, is expected to fall as higher service costs are likely to dilute the effect of a larger budget, the brokerage said.” 

Chemical Industry Growth Expected to Pick Up in Coming Years

Despite a contraction this year, U.S. chemical production (excluding pharmaceuticals) is expected to realize overall growth of 1.6% in 2016, followed by 3.6% growth next year, and 4.8% in 2018, according to the American Chemistry Council’s Year End 2016 Chemical Industry Situation and Outlook.

Production grew in every major chemical producing region in the U.S. during 2016. Over the next five years, the most dynamic growth will occur in the Gulf Coast region, followed by the Ohio Valley and Southeast regions. In the long-term, the U.S. chemical industry will grow faster than the overall economy, and by 2020, U.S. chemical industry sales are expected to exceed $1 trillion. 

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