Ohio poised for shale-fuelled boom in petrochemicals – study finds

Petrochemical plant
Source: DollarPhotoClub

It’s not all doom and gloom in Ohio even as shale drillers are leaving the state – Cleveland Business reports. The state long known for its manufacturing, Ohio is set to benefit from a boom in petrochemical industry, benefiting from low-cost natural-gas-derived feedstocks.

Ohio already is a significant national player in the chemical industry, exporting chemical commodities worth $6.5 billion a year but traditionally the majority of the feedstocks required for production was transported from the Gulf Coast, where most of the ethane crackers are located. Should similar facilities be built in Ohio, the savings on transporting ethane and polyethylene would amount to as much as $100 million per year for each prospective local large-scale cracker – a new study has found.

A study completed at the Center for Economic Development and the Energy Policy Center at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs, and commissioned by the economic development groups, TeamNEO, JobsOhio and the Regional Competitiveness Council, has estimated that by 2020, the ethane throughput in Ohio should be around 162,000 barrels per day. This is because the states domestic natural gas production – even at currently depressed prices – is expected to increase from 1.5 billion cubic feet in 2014 to about 4.75 bcf/d by 2020. Around 50 percent of that production would be ethane-rich “wet” gas.

This is great news for Ohio – a state second after Texas in terms of a proportion of workers employed in the chemical industry. The share of the national employment in the industry in Ohio stands at ten percent – twice that of the national average.

As Cleveland Business pointed out, about 69 percent of all U.S. chemical commodity employment is within a 500-mile radius of the Ohio Valley — an effective one-day transportation distance. Likewise, $134 billion of the area’s gross regional product is generated by 57 percent of the commodity chemical companies within this radius, the study reported.

Before this optimistic scenario can become reality, however, there need to be companies who will invest in the infrastructure in the state. The study identifies four petrochemical companies which have expressed interest in building ethane crackers in the Appalachian Basin, either in Ohio or along the Ohio River. If all four crackers are built, they could process about one-third of the local ethane supply, or more than 200,000 barrels a day, by 2020, the study found.

Source; Crain’s Cleveland Business

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