Shifting Streams

The Marcellus and Utica shale basins are experiencing a new kind of natural gas development. This time, it’s above ground.

A report by the Pittsburgh Business Times disclosed that ExxonMobil is looking to join Shell in their Pennsylvania downstream efforts. According to the report, sources within ExxonMobil have indicated that the energy giant is scouting the Beaver County area for large plots of land on the Ohio River. The site would be the location of a new ethane cracker plant.

The alleged ExxonMobil cracker would be the second built in Beaver County, following Shell’s plant which is currently in construction. Exxon’s inquiry into Beaver is indicative of the turn in the United States’ downstream natural gas development. While this cracker plant would be the second built in Pennsylvania, it would also be the second cracker plant built outside of the Gulf Coast, which has been the hub for downstream development for decades. Exxon is likely enticed by the same factors Shell was when searching for their cracker’s home: an abundance of inexpensive natural gas, a wealth of laborers, and access to the Ohio River for exporting.

While controversy has risen over the environmental impacts of cracker plants in the region, there are considerable economic gains from the new industry. The Shale Gas Knowledge Hub conducted an economic impact analysis for Shell’s cracker plant, which showed gains in employment in the thousands and a 12.8 percent boost in earnings countywide.

It is unconfirmed that ExxonMobil has purchased or is in the process of purchasing land in Beaver. However, given the growing presence of downstream development in the region, it is likely that Exxon is following Shell’s lead in Pennsylvania, and PTT Global’s efforts in Ohio.

Natural gas development in the Marcellus and Utica basins is expanding beyond extraction and distribution. Up-and-midstream development has set the stage for downstream developers to expand into Pennsylvania through the extraction of copious amounts of natural gas that more-than-satisfies regional demand, while also laying the pipeline infrastructure necessary to transport raw natural gas to chemical plants. The region should expect more downstream development.