Pennsylvania Petrochemical Manufacturing About to Take Off

Pennsylvania is normally known for its steel manufacturing or the Pittsburgh Steelers or the Roberto Clemente bridge, but that is all about to change. Pennsylvania is about to be at the forefront of an American revolution. Pennsylvania produces the second most natural gas in the United States, behind only Texas. The abundance of natural gas from the Marecllus and Utica Shale plays have contributed to significant economic benefits for Pennsylvania.

Southwestern Pennsylvania will be the location for a new ethane cracker, which should be done by 2021-2022. This world-class, ethane fed steam cracker will produce 1.5 million metric tons per year of ethylene, which will be converted to more than 1 million metric tons per year of high-density polyethylene and 550,000 metric tons per year of linear low-density polyethylene.

Pennsylvania is not only at the center of this revolution because of their natural gas reserves, but also because of their prime location. Over two-thirds of the US and Canadian polyethylene and polypropylene demand is located within 700 miles of Southwestern Pennsylvania. IHS Markit predicts that Marecellus and Utica’s contribution to total US natural gas supply is expected to increase from around 25% in 2015 to around 40% by 2030.

Along with Pennsylvania financially benefitting from the plant, citizens will also benefit from the production of the plant. It is estimated that between 6,000 and 10,000 workers will be needed to complete construction. Pennsylvania is also in a position to sell natural gas because a large base of plastic manufacturing plants which are available to purchase some of the output. IHS Markit forecasts that $7.3-10 billion will be invested in natural gas liquids assets between the states of Pennsylvania, Ohio and West Virginia between 2017 and 2025.

Development of the new ethane cracker plant will enable the petrochemical manufacturing value chain to continuously grow. A broad range of plastic manufacturers that physically and/or chemically convert them into a wide range of plastic products are in the area and will benefit from the new ethane cracker plant. As the petrochemical manufacturing chain develops, plastic manufacturers will sell their products to customers who use them to make something else- for example, food packaging, milk jugs, containers for pharmaceuticals and cosmetics, straws and containers for household and industrial chemical products. Although the ethane cracker plant is years away from being operational, Pennsylvania already has a strong presence of plastic manufacturers.

One major factor which either attracts or deters a company from starting a new petrochemical plant in a certain area is the cost of doing business. According to KPMG’s Competitive Alternatives study, which evaluates metropolitan areas in the United States and internationally based on 26 location-sensitive criteria, ranked Pittsburgh, Pennsylvania as the fourth best with a cost of doing business index of 98.0. A number under 100 implies that the city is below the national average for cost of doing business.