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Energy, petrochemical ‘renaissance’ possible in Appalachian Basin: DOE

by Erika Green

The Appalachian Basin is projected to grow economically because of its energy resources, next-generation manufacturing, and petrochemical development and expansion, according to a new report released on Tuesday by the U.S. Department of Energy (DOE).

In fact, the region “is on the cusp of an energy and petrochemical renaissance,” the DOE said.

The report, looking at economic progress and opportunities, was compiled by eight federal agencies to comply with an executive order from President Donald Trump, Kallanish Energy reports.

“Appalachia’s economic viability during this recovery will serve as a key indicator of the prospects for and overall health of United State economic recovery,” the report said.

The Appalachian Basin is the No. 1 source of low-cost natural gas in the United States, but it has seen coal production decline sharply although coal remains an important energy resource, the report said.

Natural gas from the Marcellus and Utica shales are increasingly fueling power plants to produce electricity. Low-cost gas also benefits glass, steel, aluminum, and cement manufacturers, it said.

Ethane, propane, and butane from natural gas in the Marcellus and Utica shales can have a major impact and help the United States and the Appalachian region recover from the coronavirus pandemic and the resulting economic downturn, the federal agency said in the 75-page report.

The potential for downstream manufacturing in Appalachia using petrochemical derivatives including ethylene and plastic resins is enormous, the report said.

Petrochemicals are needed to produce personal protection equipment (PPE) from latex gloves to N95 masks to plastic face shields, and the Appalachian region could play a key role moving forward, it said.

It is not the first time that DOE has cited such a petrochemical renaissance possible in the Appalachian Basin.

Royal Dutch Shell is building an ethane cracker in Beaver County, Pennsylvania, and PTT Global Chemical has plans for a similar facility in Belmont County, Ohio.

The facilities together represent an investment of $16 billion to $20+ billion and will create 1,200 permanent jobs and 12,000 construction jobs, DOE said.

Current ethane production in the Appalachian Basin is about 250,000 barrels per day but that is exported out of the region. By 2025, that volume is projected to grow to 640,000 barrels per day, a portion of which would go to the planned crackers.

Propane and butane could also produce similar economic boosts for the Appalachian Basin of eastern Ohio, western Pennsylvania, West Virginia, and Kentucky, it said.

The region could support multiple polypropylene, ammonia, and methanol production facilities, it said.

Each of those anchor facilities would produce petrochemical derivatives which are building blocks for chemicals, plastics, solvents, synthetic rubber, antifreeze, pharmaceuticals, and other products.

Such anchor facilities producing petrochemical derivatives will provide feedstocks to hundreds of new and existing downstream manufacturers in the Appalachian Basin.

The American Chemistry Council said the possibilities in the petrochemical sector alone could result in an economic expansion of $28 billion a year and the creation of 100,000 jobs in the Appalachian region.

In-region petrochemical development “would maximize the economic benefit to Appalachia,” the report said.

Right now, the Appalachian Basin annually produces $30 billion in plastic consumer goods using feedstocks largely imported to the region.

In-region production of such feedstocks will provide lower costs, greater profitability, and a basis to expand manufacturing, it said.

But federal, state, and local governments must help that renaissance happen, along with private investment, DOE said.

Public sector investment is needed to create a pro-growth business environment, develop needed public infrastructure, and support workforce development, it said.

The DOE’s glowing report comes out just two weeks after the governors of Ohio, Pennsylvania, and West Virginia got a letter warning that the Appalachian Basin may not see a major petrochemical industry expansion or an increase in jobs.

The letter came from eight regional economists, engineers, public policy analysts, and former policymakers, the Columbus Dispatch newspaper reported.

They cited the plummeting price of plastics and a global saturation of ethane crackers and plastic manufacturing in urging the governors not to invest heavily in a petrochemical boom that might not happen, it reported.

The new DOE report is available here.

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