A Third Cracker Possible??

A Thai-Japanese partnership is looking at the possibility a building a cracker plant in the Appalachian Basin.  This is the third cracker that has been proposed for the region.  If all three are built, this area could become 'the Silicon Valley of the plastics industry.'

http://powersource.post-gazette.com/powersource/companies-powersour...

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Permalink Reply by Trapper on September 28, 2014 at 2:34pm
Interesting! Thanks Jim.
All three are navigable river locations. Do you see barge transport as essential for shipping raw materials or finished product? Or mainly to facilitate construction by providing means to bring in bigger prefabbed parts for these plants?
Permalink Reply by Harry E. Rose on September 28, 2014 at 2:42pm
Or do tbey need water for processing?
Permalink Reply by searcherone on September 28, 2014 at 4:47pm

At last this news is out! No I do not have an inside track.  I just read and search.  And for all of you on this site who say that corporate presentations released to the public are not valuable here is why they are.   Because there are clues in those presentations in the details.

When reading the July presentation by Magnum Hunter on page 63 the heading is "Ethane Projects"  and  it stated .   Local projects: Shell, Braskem, PTT and others

Now ask yourself why does Magnum Hunter have that in their presentation?   Does it mean PTT is looking at sites where Magnum Hunter has leased acreage?    I don't know.  I am just asking the question

Permalink Reply by Trapper on September 28, 2014 at 11:33pm
Subtle clues. I agree.
Permalink Reply by Jim Litwinowicz on September 29, 2014 at 8:48am

All three are on the river. I know one of Shell's criteria was barge access. Was it for raw materials, finished product or for bringing in pre-fabbed equipment?  Don't know as they didn't say but I am assuming it is for all of the above.  Certainly much of the equipment will be manufactured in La or Tx where they have the expertize and experience in making such equipment

But bringing in ethane or shipping out ethylene by barge is also pretty important, I imagine  Especially in the early years before new end-user plants are built nearby. Don't know how much water is used by crackers though.

The big ? is there enough ethane to supply three crackers and/or enough demand for their product?  Way above my pay grade there.  May be enough for more than that for all I know.  I suspect they don't know for sure at this point.  Time will tell.

Permalink Reply by Bluflame on September 30, 2014 at 5:03am

Jim,

   A while back, I saw several charts predicting  sufficient ethane supply in the Utica/Marcellus to support ~6 crackers the size of Shell's. If anything, actual ethane supply has proven to be even higher. In the meantime, plans are in progress to build mega-ships to transport ethane to Europe for their crackers, most currently fueled by mideast-supplied naptha, a crude oil derivative. Seems to me that economics favor retaining the ethane in the Utica/Marcellus region....it must cost a fortune to process and transport ethane, first by Mariner East pipeline to the east coast and then to Europe via ship.

  Further clouding the water is the current over-supply of crude oil in the US and declining prices vs increasing prices for natural gas (ethane prices follow NG prices). Will the current huge price disparity of crude vs NG on an equivalent BTU basis continue?

  Unfortunately, the answers to these questions are also way above my pay grade! But at least it is good to understand the factors involved. Furthermore, there are likely other factors I've overlooked, such as when does the world ethylene supply reach saturation and price discounting set in??

 

IMHO,

BluFlame

Permalink Reply by gary smith on September 29, 2014 at 12:05pm

pa. elects wolf and there won't be a cracker.

Permalink Reply by jason irvine on September 29, 2014 at 3:15pm
Jim. I believe there is enough now I'd not close. I think there concern is longevity. That is were all the ifs and maybes lie. I'm keeping my fingers crossed
Permalink Reply by jason irvine on September 29, 2014 at 3:16pm
There is enough now if not they are close.
Permalink Reply by Philip Thackray on October 2, 2014 at 12:56am

Rusty Braziel at RBNEnergy.com refered to the ethane market as the "ethane asylum".  On my latest check stub from XTO the ethane sold for 19 cents/gallon.

From what I read on sites like RBN Energy it seems as though there will be a surplus of ethane for a LONG time.

Phil

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