An independent report, “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast”, IHS Markit compared financial risks and returns of plastics investments in the Ohio-Pennsylvania-West Virginia region to those in the US Gulf coast. The report, commissioned by Shale Crescent USA, an economic development consortium, conclude a significant financial advantage for a plastics investment in the region when compared to a similar investment in the Gulf Coast. The report states a $3 billion plant in the Marcellus-Utica region could earn up to $930 million in cash flow over a 20 year life span versus a $217 million cash flow in the US Gulf Coast. Factors involved in the favorable comparison are an abundant supply of natural gas, proximity to over 50% of the polyethylene market within a day’s drive, access to water, skilled labor force and cost advantages.
Royal Dutch Shell PLC has started construction on a plant in Monaca PA, and discussion of at least two other facilities could be built in the region.
While other similar research reports have come to the same conclusions, the chemical industry has a large footprint in the Gulf, where it enjoys a skilled workforce and access to Asian markets through the Panama Canal. Many domestic companies already have facilities there, and can increase capacity without putting up a new plant. The competition can be healthy for the US economy and workforce growth.
A copy of the report may be found on the Shale Crescent USA webpage