Pennsylvania — Along the banks of the Ohio River here, thousands of workers are assembling the region’s first ethane cracker plant. It’s a conspicuous symbol of a petrochemical and plastics future looming across the Appalachian region.
More than 70 construction cranes tower over hundreds of acres where zinc was smelted for nearly a century. In a year or two, Shell Polymers, part of the global energy company Royal Dutch Shell, plans to turn what’s called “wet gas” into plastic pellets that can be used to make a myriad of products, from bottles to car parts.
Two Asian companies could also announce any day that they plan to invest as much as $6 billion in a similar plant in Ohio. There’s a third plastics plant proposed for West Virginia.
With little notice nationally, a new petrochemical and plastics manufacturing hub may be taking shape along 300 miles of the upper reaches of the Ohio River, from outside Pittsburgh southwest to Ohio, West Virginia and Kentucky. It would be fueled by a natural gas boom brought on by more than a decade of hydraulic fracturing, or fracking, a drilling process that has already dramatically altered the nation’s energy landscape—and helped cripple coal.
But there’s a climate price to be paid. Planet-warming greenhouse gas emissions from the Shell plant alone would more or less wipe out all the reductions in carbon dioxide that Pittsburgh, just 25 miles away, is planning to achieve by 2030. Drilling for natural gas leaks methane, a potent climate pollutant; and oil consumption for petrochemicals and plastics may account for half the global growth in petroleum demand between now and 2050.
Despite the climate and environmental risks, state and business leaders and the Trump administration are promoting plastics and petrochemical development as the next big thing, more than three decades after the region’s steel industry collapsed and as Appalachian coal mining slumps.
“We have been digging our way out of a very deep hole for decades,” said Jack Manning, president and executive director of the Beaver County Chamber of Commerce.
“When Shell came along with a $6-to-$7 billion investment … we were in the right spot at the right time,” he said.
Everyone wants jobs and economic growth, said Cat Lodge, who works with communities in the Ohio River Valley affected by the shale gas industry for the Environmental Integrity Project, a national environmental group. But not everyone wants them to be based on another form of polluting, fossil fuels, she said.
“While the rest of the world is dealing with global warming, Pennsylvania and Ohio and West Virginia are embracing developing plastics, and that just appalls me,” Lodge says. “It’s just not something I see as the future and unfortunately that seems to be the push to make that the future. And that’s upsetting.”
Lodge and her husband moved from Pittsburgh to the countryside 18 years ago in search of fresh air and open land. They have a small farm in a corner of rural western Pennsylvania, where winding roads trace the contours of Appalachian hills and a stark transition fueled by a shale gas boom is underway.
“We still love it, but little by little, and quickly over the last several years, we have become totally surrounded by the oil and gas industry,” she said.
Rising Demand, but Also Pushback on Plastics
The natural gas that’s pulled from deep underground in the Utica and Marcellus shale formations has done more than outcompete coal for electricity generation.
Drilling companies have also extracted a lot of natural gas liquids, particularly ethane, also called wet gas. It’s used to produce ethylene, which then gets turned into plastics, providing an additional revenue stream for the oil and gas industry. It’s the industry’s latest play, and it comes at a time when industry analysts and the federal government say the demand for plastics is skyrocketing.
“These materials are hooked into just about every part of the economy, from housing to electronics to packaging,” said Dave Witte, a senior vice president at IHS Markit, a global data and information service. “Today, the world needs six of these plants to be built every year to keep up with demand growth.”
IHS Markit calls the Appalachian or upper Ohio River region “the Shale Crescent.” Last year, it reported that the region’s gas supplies could support as many as five large cracker plants, like the one Shell is building. The plants “crack” ethane molecules to make ethylene and polyethylene resin pellets and would be in close proximity to a number of manufacturers that use those products to make everything from paints to plastic bags.
IHS does see some headwinds, including an international backlash against plastics. It published a report last summer that found that worldwide pressure to reduce plastic use and increase recycling was one of the biggest potential disruptors for the plastics industry and was “putting future plastics resin demand and billions of dollars of industry investments at risk.”
The oil and gas industry might find themselves with stranded assets, needing to abandon Ohio River valley communities, said Lisa Graves-Marcucci, a Pennsylvania-based organizer for the Environmental Integrity Project.
“Do they really care,” she asked, “if they can make money for the first 10 years or 20 years of their operation, but then plastic goes away in the world? What happens to the communities that are left behind?”
She said she is also worried about such a major investment in oil and gas as the world grapples with the effects of climate change.
Visions of an Appalachian Plastics Hub
The idea for a plastics hub in Appalachia got a lift in December with a report to Congress from the U.S. Department of Energy. It described a proposal for the development of regional underground storage of ethane along or underneath the upper Ohio River.
Storage is needed to help provide a steady and reliable stream of ethane to ethane cracking plants, and it would be important for the development of a regional petrochemical complex in the upper Ohio River valley, the report concluded.
A West Virginia business, Appalachia Development Group LLC, has proposed developing storage for ethane, possibly in mined salt or limestone caverns deep underground. It’s in the second phase of an application process for $1.9 billion in loan guarantees from the Department of Energy for the project, according to the department.
“We have sites of interest in Pennsylvania, Ohio and West Virginia,” said Jamie Altman, a representative of Appalachia Development Group. “We are aggressively pursuing private capital.”
The Energy Department is thinking big, too.
Its report projects ethane production in the Appalachian basin would continue rapid growth through 2025 to a total of 640,000 barrels per day, more than 20 times greater than five years ago. By 2050, the agency said ethane production in the region is projected to reach 950,000 barrels per day.
China Energy signed an agreement with West Virginia in 2017 to potentially invest $84 billion in shale gas development and chemical manufacturing projects in the state. Late in January, West Virginia’s development director, Mike Graney, told state senators that China Energy was looking at three undisclosed “energy and petrochemical” projects. An announcement could be made later this year, he said, though President Donald Trump’s trade war with China was causing delays.
Other experts see a natural gas industry that’s subject to booms and busts and question whether the region is headed down another unsustainable path, like coal.
“We are less optimistic than the industry that this will really boom out,” said Cathy Kunkel, an energy analyst with Institute for Energy Economics and Financial Analysis, an environmental think tank that just published a report detailing how the natural gas industry in West Virginia hasn’t lived up to earlier expectations for jobs and tax revenue.
There is a huge amount of international competition for plastic production, she said. “All of the major oil exporting countries in the Middle East are talking about making massive investments in petrochemicals over the next five years or so,” she said. “That contains the risk that you will be exporting into a market that would be oversaturated with products.”