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Shell's plans to build cracker plant gets boost from FERC rate approval

Houston — Shell's plans to build a world-class ethane cracker in western Pennsylvania took a step forward Friday with the approval by the US Federal Energy Regulatory Commission of rate structures for the company's proposed Falcon Ethane Pipeline system.

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The approval allows Shell to move forward in its plans to build the 97-mile pipeline designed to carry ethane extracted from Marcellus and Utica gas produced in Pennsylvania, West Virginia and Ohio.

The Falcon Pipeline, with a proposed capacity of about 107,000 b/d, will originate at two ethane supply points in Ohio and one ethane supply point in Pennsylvania and will transport the ethane to delivery points in Ohio and Pennsylvania, including the 86,000 b/d ethane cracker that Shell proposes to build near Monaca, Pennsylvania.

Shell Pipeline had filed July 3 a petition requesting that FERC approve Shell's proposed rate structures, service priority rights, prorationing provisions and various aspects of the transportation service agreement.

In its order, FERC found that Shell conducted the open season for the project, which ran from October 17, 2016, through November 18, 2016, appropriately.

Shell has said construction of the Falcon Pipeline is a key component of its plan to build the cracker, the first large-scale polyethylene production facility in the Northeastern US.

The Falcon Pipeline and the ethane cracker will be located in the heart of the market for the plant's output. The surrounding region is home to more than 70% of the North American polyethylene market, Shell said.

The company plans to transport polyethylene produced at the plant by rail and truck to industrial facilities in Pennsylvania and surrounding states and Canadian provinces for consumption in a wide range of plastics-related uses. -- Jim Magill, jim.magill@spglobal.com

-- Edited by Pankti Mehta, newsdesk@spglobal.com