Significant Investment in the Appalachian Basin's Shale Play

Recently, Royal Dutch Shell announced it is moving forward with a planned ethane cracker project slated for Beaver County, Pennsylvania. The potential for this project was first announced in 2012. The announcement comes at a time when drilling activity in the Appalachian Basin has declined significantly from recent levels due to the decline in oil and natural gas prices. While current production levels are at an all-time high, maintaining and increasing supply will come only with future drilling and completion activity.

According to the announcement, construction of the facilities will commence by the end of 2017 with commercial production expected to begin early in the next decade. Up to 6,000 construction workers are expected to work on the project with approximately 600 employees in place once construction is completed.

The project will result in a complex of facilities capable of producing polyethylene utilizing ethane produced from the region’s Marcellus and Utica shale production activities. This supply will serve the petrochemical industry by providing low cost, locally sourced feeder stock for the chemical manufacturing process.

The oil and natural gas industry historically has experienced periods of significant expansion and contraction primarily based on volatile commodity prices. This significant investment along with the various pipeline projects either under construction or expected to commence soon demonstrate a commitment to the long term viability of the region’s shale play.

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