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UPDATE: Ohio ethane cracker project delayed; partner withdraws

While the Asian partners backing a proposed ethane cracker in Ohio have delayed the project, citing significant impacts from the COVID-19 pandemic and oil price volatility, local economic development executives say the pandemic has a silver lining and an opening for a U.S. partner.

PTTGC America LLC and Daelim Chemical USA Inc said in a joint statement July 14 that the Ohio Petrochemical Complex project in Belmont County is expected to be delayed by six to nine months. Daelim Chemical is withdrawing as equity partner in the project, and PTTGC America said it was looking for another partner. A final investment decision on the ethane cracker had been expected this summer.

This is the second time PTTGC America has delayed the project due to the coronavirus pandemic.

The new partner could be a U.S.-based manufacturer looking to "reshore" operations from overseas to the U.S., particularly a maker of healthcare or defense products, economic development group Shale Crescent USA's Director of Marketing and Sales Greg Kozera said July 15, taking advantage of the Ohio River Valley's access to cheap shale gas and ethane, as well as its proximity to larger manufacturers and customers.

Kozera said the pandemic has stimulated the public's interest in bringing plastics and other manufacturing back to the U.S., creating an even larger market for the ethylene pellets the new cracker will produce from Marcellus and Utica Shale ethane.

"Americans learned from COVID-19 just how dependent we are on China," Kozera said. "Shale Crescent USA has changed our focus from bringing petrochemical companies here to helping manufacturers who are already here to expand and create jobs. ... What products [are] the U.S. purchasing from China that need to be made here?"

JobsOhio, the state's economic development agency, said it will keep working with PTTGC America to bring the project to completion but had no immediate candidates to replace Daelim as a project partner. "PTTGC America has expressed its belief in the long-term strategic importance of this transformational project, which would bring billions in investment while creating thousands of construction jobs and hundreds of permanent jobs," JobsOhio spokesman Matt Englehart said. "We appreciate Daelim's contributions toward the effort to bring a petrochemical facility to Belmont County."

In June 2019, PTTGC America's parent company, Thailand's PTT Global Chemical PCL, named U.S. engineering firm Bechtel Corp. as the primary contractor to build a plant that uses heat to "crack" ethane molecules stripped out of the natural gas production stream and converts the ethane into ethylene, a basic building block for plastics. The Ohio plant would be able to produce 1.5 million tonnes per year of ethylene.

Bechtel is already building a similar ethane cracker in Beaver County, Pa., for Shell Chemical Appalachia LLC, capable of producing 1.6 million tonnes of polyethylene per annum. That plant was expected to go into operation this summer.

The U.S. Department of Energy estimates that the Marcellus and Utica shales can support up to four more crackers besides PTTGC America's and Shell's. Observers expected a final investment decision on PTTGC America's project almost two years ago.