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Royal Dutch Shell announced on June 7, 2016, that the final investment decision has been given for construction of a petrochemical plant in western Pennsylvania. The plant will be located near the Marcellus and Utica shale plays and will collect ethane from the area to make ethylene for use in the manufacturing of plastics.

The plant announcement was five years in the making and leaders in Western Pennsylvania breathed a sigh of relief upon the completion of the agreement. The long-awaited plant will be in Beaver County, about 30 minutes northwest of Pittsburgh.

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The location was chosen because of its proximity to gas supplies, creating shorter and more reliable supply chains than those for comparable facilities on the U.S. Gulf Coast, and because it will be within 700 miles of North American polyethylene customers, the company said.

Construction will commence on the plant in roughly 18 months, and is expected to spark the local economy with the creation of approximately 6,000 construction jobs. Once completed, the plant is expected to employ 600 full-time workers at the facility. The expected cost of the plant is between $2 billion and $3 billion.

It’s not just the energy industry that will surely benefit: Officials and manufacturing experts have said that the cracker, a big chemical plant that will produce plastics for food packaging and containers among other uses, will also spur stronger industrial development. Pennsylvania Governor, Tom Wolf, welcomed the project as a boost to the economy and a strong endorsement of Pennsylvania’s abundant natural gas resources.

Penn: Leader in Both Energy Manufacturing and Downstream Production

“My administration is committed to creating jobs in the energy industry through responsible, well-regulated extraction and long-term, creative industrial growth,” Wolf said in a statement. “We have worked to develop strategies for safe and responsible pipeline development that brings resources to markets and facilities and we have prioritized the Shell plant to show the world that Pennsylvania is a leader in energy manufacturing and downstream production.”

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What it means for the natural gas industry is that it will have a ready market for the ethane byproduct, which the Shell plant will take and make plastic out of. Several natural gas producers already have contracts with Shell just in case the plant was to become a reality.

Often, natural gas producers will reject the ethane that is naturally occurring in their natural gas production– i.e., they will sell it into the natural gas pipelines along with the gas stream if prices for ethane, an NGL (natural gas liquid), don’t warrant separating it.

Shell said the complex will use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce 1.6 million tonnes of polyethylene per year. Shell describes the output from an ethane cracker plant as the first stage in the chemicals manufacturing chain. This is the third major petrochemical announcement from Shell in recent months. Shell said that commercial production from the Pennsylvania cracker is expected to begin early in the next decade.

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