Pittsburgh, PA – Field Intern at EQT Corporation
Student, Penn State University Petroleum and Natural Gas Engineering
President of the Society of Petroleum Engineers at Penn State University
Adam Larson talks about the tremendous difference the Shell cracker will make for Western Pennsylvanians and the natural gas industry.
The oil and gas industry took off in Western Pennsylvania right around 2008. Digging deep into the Marcellus and even deeper into the Utica, operators have since been biting away at vast layers of shale. Turning the drill bit ever so slightly and kicking out into the lateral, producing natural gas has never been more economic. Now, combine this with hydraulic fracturing and you’ve got two tremendous technologies working hand in hand.
With the duo of the Marcellus and Utica, both dry and wet gases are being pushed back out the pipes and as the wet gas shale resources are developed, natural gas liquids (NGLs) are being captured. When upstream kicks the can to midstream, substantial amounts of NGLs are being handled. Most of these NGLs are now either being held in storage or shipped down to south to Texas or Louisiana for downstream refining.
Shipping from north to south with a downturn of commodity prices – this may seem nonsensical. This is where Shell’s Beaver County ethane cracker plant comes into play – leveraging resources that are already here to create a by-product; “cracking” ethane into ethylene. After waiting for the official announcement of this project for years, the approved start of the cracker has finally come to fruition.
Here’s what the Shell cracker means for Western Pennsylvania:
More good paying jobs
When the shale industry took off in this region, jobs were plentiful, whether it was blue-collar or white-collar work. Witnessing this in my backyard, I took a deep interest in this cyclical industry.
When the American shale revolution took a nose-dive in 2014, the industry went lean. It was a tough time for many. I have personally seen friends and family members lose their jobs. I have seen internships cut and graduating seniors shoved to the side.
The Shell cracker will reenergize this industry and put people back to work. Shale will make a quicker comeback because of this project.
Moving gas, lifting supply
As mentioned above, oil and natural gas prices tanked in 2014 due to oversupply and an unanticipated decrease in demand. Pipelines are scarce and gas isn’t being moved quick enough. Markets are hungry for gas and midstream is playing catch-up with upstream.
Shell’s cracker will alleviate some of this stagnant pipeline growth. With the combination of cranking pipelines online and the Shell cracker, Western Pennsylvania is poised to dominate the shale industry.
Creating long-term growth, sustainability
Activists opposed to hydraulic fracturing aren’t likely to grasp this, but the natural gas industry, altogether, is much, much bigger than they suppose; unstoppable, in fact. If Shell is investing close to $6 billion on this project, you know shale is here to stay. Out of all the places in the country, Shell chose Western Pennsylvania. Let that sink in.
Most Western Pennsylvanians have happily accepted the industry and now the activists are going to also have to embrace reality; this shale industry is here to stay for the long haul.
The Marcellus & Utica, a place to call home
Yes, this ethane cracker is a basis for optimism and reasserts what those of us close to the industry have already known all along – this industry is here to stay for a long, long time. We’re located on top of unrivaled shale resources in one of the largest plays in the world – the combined Marcellus and Utica. Subsequently, Shell’s investment will help further develop this region and its rich assets.
The Shell cracker will, too, further eliminate our dependency on foreign oil and having to negotiate with countries that don’t like us very much. This is also a gateway into making things in America and revitalizing America’s manufacturing.
No longer are young Pittsburghers going to leave this area. Jobs are here to stay and will be on the upswing with this Shell cracker underway.
Sticking it to OPEC
OPEC opened the spickets and flooded the market with oil, creating a whirlwind that shook the industry. Part of OPEC’s plan worked and many operators and service companies have filed for bankruptcy. But, this plan will not be sustainable for much longer.
Much of the countries in the cartel are struggling to survive. There is current speculation that Saudi Arabia and others will choke back.
Regardless, Shell’s ethane cracker will depressurize the current situation and hopefully create an uptick in American shale.
By this point, OPEC needs to realize unconventional American shale is not going anywhere. It’s now conventional, in fact. We’re staying put, and our boots will stick right here in Western Pennsylvania.