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Shale and the Ohio River Corridor

  Fall 2017

Shale and the Ohio River Corridor
By: Bryce Custer, Harvey Goodman Realtor

Part 1 of a 4 part series

The Ohio River has played a significant role in transportation of goods and the development of villages and towns from what is now Pittsburgh, Pennsylvania to the Mississippi River. In 1803, the Lewis and Clark Expedition created the first Ohio River Navigation Charts.

Fast forward to the 19th and 20th Century. The age of Industrialism had come to the Ohio River which brought opportunity and thriving economies. Up and down the Ohio River smoke was billowing out of chimneys and barges were in tow signifying the pinnacle of the age of steel and coal throughout Ohio, Pennsylvania and the northern panhandle of West Virginia.

During the late 20th and early 21st century, many factories and mills production came to a halt. It was no longer efficient to produce steel and other products from antiquated facilities. The Ohio River Corridor in the tri-state area was coming to be known as the “Rust Belt”.

During the early 2000’s, technology was created to extract oil, natural gas and natural gas liquids (NGLs) from the elusive shale formations in Pennsylvania and West Virginia. Once again, the Ohio River Corridor would come alive and provide a necessary resource to write a new chapter of history.

The Shale Boom

The Point Pleasant (Marcellus and Utica) shale formation has created thousands of jobs and billions of dollars of infrastructure in the Tri-State area. A component of the natural gas, ethane, would be shipped to Sarnia, Ontario or to the Gulf Coast to be cracked into ethylene. Ethylene is the raw material used in the plastics industry to create: HPDE (High-Density Polyethylene), LDPE (Low-Density Polyethylene), PS (Polystyrene) and PVC (Polyvinyl Chloride).

The Ohio River Corridor is coming alive with discussion of new petrochemical plants known as “cracker plants”. The investment of a single cracker plant is over six-billion ($6B) dollars. Private and public entities are “re-purposing” obsolete factories and facilities to produce plastic components at a cost lower than other areas of the world. Plans of a tri-state collaboration to create the Appalachian Ethane Storage Basin (a $10 billion project) along the Ohio River Corridor would provide a constant supply of ethane for the cracker plants. At least two companies have announced intentions to build cracker plants along the Ohio River.

Shell Chemical announced their facility at a former zinc smelting facility in Beaver County, Monaca, Pennsylvania.
PTT Global Chemical (PTTGC) announced potential building of a cracker plant at the former First Energy R.E. Burger Site in Belmont County, Dilles Bottom, Ohio.

Current State

As of August 2017, Shell is the only company to fully commit to building a six billion-dollar facility. The PTTGC project is currently “on hold” although PTTGC has already invested over one hundred million dollars on site acquisition and inspection. Word on the street is an expected announcement in early 2018 as to whether the project will proceed.

The Ohio River Corridor is an excellent location for the development of cracker plants in the tri-state area. The Ohio River provides necessary water and a means of efficiently transporting goods to the Gulf Coast and throughout the mid United States. The area is rich with rail infrastructure due to the former steel and power plants in the area. With the advent of efficiently recovering ethane from the Point Pleasant shale formation, the area has enough supply of ethane for feed stock of at least five cracker plants in the tri-state area. This investment could approach thirty billion dollars.

The recovery of the Ohio River is no longer a dream, but a reality that will provide rich rewards to the Ohio River Corridor and have a ripple effect to surrounding counties and states. The proposed cracker plants will provide cost effective feed stock to be used in the plastics industries both domestically and globally. The United States will have one of the lowest costs of plastic feedstock in the world.

We are actively working with private and public agencies for site possibilities along and around the Ohio River Corridor in the tri-state area. We are actively looking at facilities to support cracker plants, GTL (Gas to Liquids) facilities, Natural Gas fired power plants, Derivative Industries and a variety of other businesses that will capitalize on the location and cost-effective supply of raw materials in the area.

Bryce Custer, SIOR, CCIM is licensed in the State of Ohio with NAI Spring, Commercial Real Estate Services. In West Virginia, Custer is licensed with Harvey Goodman Realtor.

Custer’s area of focus is Site Selection for Petrochemical and Energy Services companies. Primary locations are along the Ohio River Corridor, Southeastern Ohio and the West Virginia Panhandle. Custer has a degree in Chemistry from Kent State University and works with multiple companies in the Energy, Oil & Gas and Derivatives Industries. Custer is well versed in logistics for companies utilizing rail and barge transportation throughout the tri-state area.
Twitter: @OhioRiverCRE