Appalachian Storage Hub November 5th, 2020 Conference IV
Appalachian Storage Hub                                                      November 5th, 2020Conference IV 

PA IHS Markit Study

Team Pennsylvania together with IHS Markit issued a study in March 2017 Executive Summary, Full Report (suggested), that investigated economic potential as result of natural gas liquids produced in the Basin relative to the prospects to enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing.

In summary the report paints a robust picture for NGL to chemicals and plastics. The rapid and continued growth of the Basin production not only yields natural gas but also NGLs such as ethane that are the raw materials for chemicals. Producing those chemicals, and downstream products in the basin avoids transportation costs in both shipping the NGLs to other locations such as the Gulf Coast and then shipping the interim plastic such as PE or PP pellets to the Basin. With 700 miles of the basin 70% of the PE and PP consumers – the plastics processors turn these into products used by consumers or OEMs.

The report offers several interesting points:

  • Transportation accounts for 65% and 70% of the cost for ethane and propane transported to Mont Belvieu, the petrochemical storage hub for the Gulf Coast. Or put in other terms, the Basin has access to ethane or propane for less than half the cost! While some of this are artifacts of the lack of pipeline capacity. Much of the costs remain once pipelines are built. The Basin has a significant raw material cost advantage for chemical production by avoiding transportation costs.
  • Natural gas has the same transportation cost advantages for the Basin, and significant cost advantages will continue for Basin consumption versus transportation to other markets.
  • Roughly 70% of North American Polyethylene and Polypropylene demand are within 700 miles of the Basin.
  • Even with the announced North American boom in chemical investment, operating rate for PE and PP facilities will remain above 90% through 2030. Creating a heathy environment for new facilities for the Basin. 
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