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Shell Targeting Marcellus Gas with Ethylene Cracker

Royal Dutch Shell said Monday it is planning to build a "world-scale" ethylene cracker with integrated derivative units in the Marcellus Shale in Appalachia. The cracker would process ethane from Marcellus natural gas to produce ethylene, one of the primary building blocks for petrochemicals.

"Building an ethane-fed cracker in Appalachia would unlock significant gas production in the Marcellus region by providing a local outlet for the ethane," said Ben van Beurden, Shell executive vice president for chemicals. "This fits well with our strategy to strengthen our chemicals feedstock advantage and would be another step in growing our chemicals business to meet the increasing demand for petrochemicals."

Shell said it is evaluating derivative choices for the facility and the leading option is polyethylene (PE), a raw material for items such as packaging and adhesives to automotive components and pipe. Most of the PE production would be used by northeastern U.S. industries, Shell said. Demand for PE in North America is expected to grow, so the economic and efficiency benefits of a regional cracker make this configuration attractive, the company said.

In April Dow Chemical Co. and a unit of Range Resources Corp. signed a memorandum of understanding for Range to deliver Marcellus ethane to Dow's existing chemical operations in Louisiana (see Shale Daily, April 25). Also recently, Chevron Phillips Chemical Co. LP said it was evaluating plans to site a "world-class" ethane cracker and ethylene derivatives facility -- fed by shale gas reserves -- in the Gulf Coast region (see Shale Daily, March 29).

Extracting ethane and other natural gas liquids for petrochemicals production is one of Shell's options for monetizing natural gas, which also include developing shipping solutions for liquefied natural gas; proprietary gas-to-liquids technology to produce fuels, lubricants and chemicals; and gas-for-transport in markets focusing on heavy-duty vehicles, marine and rail transportation, the company said.

"U.S. natural gas is abundant and affordable. Shell has the expertise and technology to responsibly develop this vital energy resource, including associated products such as polyethylene for the domestic market," said Shell Oil Co. President Marvin Odum. "With this investment, we would use feedstock from Marcellus to locally produce chemicals for the region and create more American jobs. As an integrated oil and gas company, we are best-placed in the area to do this."

A site for the ethane cracker facility is yet to be selected, and construction would be subject to the receipt of multiple permits.

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