Royal Dutch Shell hasn’t decided if it will build an ethane cracker in Beaver County, but it’s taking bids from oil and gas companies in the Marcellus and Utica shales to gauge how much ethane would be available if it pulls the trigger. Shell began a two-month bidding period Tuesday to supplement commitments it already has secured with Consol Energy Inc., Noble Energy Inc., Seneca Resources Corp., and Hilcorp Energy Co. Shell’s own exploration and production company also would feed ethane into a potential cracker. Absent from that list are some of the region’s largest so-called wet gas producers, including Range Resources, Chevron Corp., Chesapeake Energy Corp. and EQT Corp.
Ethane, a natural gas liquid found in shale gas in Western Pennsylvania, can be turned into ethylene, a feedstock for the petrochemical industry. Texas-based Range, whose local headquarters is in Southpointe, already has committed to shipping 300 million barrels of ethane by pipeline over the next 15 years. But company spokesman Matt Pitzarella said it can produce more than three times that from its entire resource base, if there’s demand. Range has met with Shell but hasn’t committed to anything yet, he said. “We will review potentially submitting a bid,” Mr. Pitzarella said. “We would look at any offer.” Shell spokeswoman Kimberly Windon said there are still “several critical milestones to achieve before making a final investment decision.” “Securing additional ethane supply is one of the key components in determining the next steps as part of the ongoing site evaluation process,” she said. Shell announced it will evaluate the current Horsehead Corp. site in Monaca for a possible cracker back in March 2012. Since then, it has extended its land option agreement with Horsehead twice to buy more time as it considers environmental, site and economic factors.
In April, Downtown-based EQT Corp.’s CEO David Porges said his company wasn’t committing to ethane pipeline projects and wondered if the area’s producers shouldn’t be keeping more of their natural gas liquids in the region to attract the cracker. The majority of U.S. crackers are on the Gulf Coast, so pipeline companies have proposed several routes to get Marcellus Shale natural gas liquids to clients. Oklahoma-based Chesapeake Energy Corp. signed on to be an anchor shipper on the Appalachia-to-Texas Express liquids pipeline, which will carry ethane to the Gulf Coast. Chevron hasn’t made any public commitments to ship ethane from the Marcellus Shale. Its sister company, Chevron Phillips Chemical Co., is building a $5 billion cracker on the Gulf Coast.
Shell’s bid process is open until Oct. 4. Companies that are interested will be asked to sign a confidentiality agreement that will grant them access to Shell’s plans not available to the public