|July 19, 2017: Global Trade (full link below)
Bringing Jobs Back To America’s Forgotten Communities
They were forgotten communities, at least in the minds of many people who lived in them.
Even as the rest of the country recovered from the recession, people in the nation’s coal fields and Rust Belt continued to suffer economically. They longed for a return to the days when their region could produce high-paying jobs, and they helped boost Donald Trump to the presidency when he promised to do just that.
Already, the hard work of making that happen is underway – but it’s not just as a project emanating from Washington, DC.
“Much of the work of restoring the economy in these areas has to begin with the people who live there,” said Greg Kozera, director of marketing for Shale Crescent USA, a non-profit, non-political group of business and community leaders from Ohio and West Virginia who are doing just that. “The federal government can do some things to help, but it’s the private sector and local government officials who really need to step up.”
There are reasons for optimism in such places as the Mid-Ohio Valley that stretches across Ohio, West Virginia, and Pennsylvania, and where Shale Crescent USA is doing its work.
“You have an area with the largest natural gas field in the world,” said Kozera. “There is easy transportation on the Ohio River and you have people eager to work. Being close to half of the markets in North America also helps. We could be on the verge of a petrochemical industrial boom, and the average job in that industry pays $100,000.”
Of course, it may be easier for communities to achieve an economic revival when there’s a much-coveted natural resource to tap into, but there are other steps leaders in these forgotten communities can take to improve their fortunes, according to Kozera. Those include:
Taking the initiative. Business and community leaders shouldn’t wait for government or outside industry to make something happen. They need to take action. “That’s what the people who formed Shale Crescent USA did,” said Kozera. “They knew if something was going to happen, they would need to be the catalyst for making it happen themselves.”
Creating awareness. Once you know what you want to achieve, you must get the word out to people and industries that can help you make it happen. For example, Shale Crescent USA is making sure that the petrochemical, glass and other industries know about the advantages the Mid-Ohio Valley provides as a place to grow or relocate. Government can do a lot to help bring in business, Kozera says, but typically doesn’t do a very good job of staying focused on marketing and sales.
Remembering that prosperity is contagious. Sometimes when multiple cities or states are involved, they become competitive and forget that exactly where industry locates doesn’t matter because the whole region will benefit from economic development. As people gain good paychecks, more businesses will spring up to serve them. The tax base also increases, which means schools, roads, parks and other government services can also improve.
“Something like this isn’t a simple task,” Kozera says. “It takes a team effort. If you can get people in a region working together, you’ll have a much greater chance of accomplishing your goals.”
So, who is Shale Crescent USA? The mission of the Shale Crescent USA economic development initiative is to encourage business growth in the Mid-Ohio Valley based upon low natural gas prices that allow manufacturers to operate more efficiently while producing products more economically with access to water and half the population of the United States and Canada. The goal is to seamlessly provide information and resources for companies and entrepreneurs looking to relocate, expand or startup. Information and resources include available properties, access to capital, workforce, incentives and taxes, energy and utilities as well as connections to political, financial, supplier and customer networks.
IRPT Members – does the last sentence sound familiar? Take a look at the 2016 Site Selections Magazine’s Top 10 “Site Selector’s Most Important Location Criteria”:
- Existing Workforce Skills
- Flexibility of Incentive Programs
- State and Local Tax Scheme
- Transportation Infrastructure
- Land/Building Prices and Supply
- Workforce Development
T7. Utilities (cost, reliability)
T7. Higher Education Resources
9. Ease of Permitting and Regulatory Procedures
10. Quality of Life
On July 13th, I shared with you the news story about the Ohio ethane cracker plant coming to a reality. Shale Crescent played a role in that.
August 28, 2016: The Exponent Telegram (full link below)
Shale Crescent USA bringing manufacturing plants to Mid-Ohio Valley
The Mid-Ohio Valley may soon be home to a petrochemical manufacturing plant (known as an ethane cracker) thanks to a new Marietta, Ohio-based initiative called Shale Crescent USA.
“As a result of the Shale Crescent event, we have one company that’s already looking at some pretty significant investments in the area,” said Jerry James, president and CEO of Ohio-based Artex Oil Company. “Another company, which is a household name in the petrochemical business, their central planning engineer called me … if they’re doing expansion, they’re looking here.”
James helped form Shale Crescent USA, along with a group of volunteers consisting of civic leaders, nonprofits, chambers of commerce and port authorities.
“We’re just getting started with the marketing, but we started this process almost two years ago to develop everything to where we are today,” said Wally Kandel, senior vice president and Marietta site manager for SOLVAY.
With the recent announcement of an ethane cracker plant in Pennsylvania, Shale Crescent USA expects the new facility to bring in millions of dollars in revenue.
“It takes 6,000 workers four years to build a plant, so that’s a lot of work,” James said. “When it’s done, it will employ 500 or 600 full-time workers, but in addition to that, it creates several thousand more support jobs for people doing repairs and everything to the plant.”
James added that jobs created in manufacturing are full-time and high-paying.
“When you get these high-paying jobs, the whole community increases,” he said. “It’s really surprising how well it spreads through the community to create jobs.”
Harry Silvis, vice president and commercial team leader for WesBanco Bank Inc. in Parkersburg, said he’s already looking forward to what these manufacturers will bring to the local communities.
“The reason I love banking is I get to work with companies across a whole broad spectrum, and this really affects everything from health care, education and recreation,” Silvis said. “These are going to (have) high-paying jobs that are really going to affect everything we do in the Mid-Ohio Valley — not only with the production but the support staff, the vendors and everything else.”
The good news is that as Shale Crescent USA continues to meet with international companies looking to invest, even more manufacturing plants will make their way to the Mid-Ohio Valley.
“We’ve identified some of the top energy users in the world,” James said. “Our goal is to send people out to directly call on those top 200 energy users to meet with us and tell them about the opportunities here in Ohio, West Virginia and Pennsylvania.”
Kandel has seen firsthand the advantages the Mid-Ohio Valley has over other countries in the world through SOLVAY’s international operations.
“A very large percentage of those places around the world are very short on fresh water,” he said. “There’s some places in the world that have natural gas but don’t have markets nearby, but 50 percent of the North American market is within a day’s drive of the Mid-Ohio Valley.”
Kandel said the Ohio River, and its access to the Gulf of Mexico, is an extreme benefit that would attract manufacturers to the Mid-Ohio Valley region.
“It has the lowest natural gas in the industrialized world, it has water for transportation and for processing,” he said. “You can ship anywhere in the world via the Gulf of Mexico, and we have access to the large markets within a day’s drive.”
James added the United States has surpassed Russia as the world’s largest producer of natural gas, primarily for the production in the Mid-Ohio Valley.
“If Ohio, West Virginia and Pennsylvania would form its own country, we would now be the No. 3 producer of natural gas in the world,” he said. “Over the last five years, virtually all the growth in natural gas production in the United States is all from Ohio, West Virginia and Pennsylvania.”
James said not only does the region have the most growth, but also the largest reserves, which has in turn given the region the lowest natural gas prices in the industrialized world.
“When you look at those other places in the world, they have natural gas, but they don’t always have the water for manufacturing and transportation, and they don’t have the markets to sell it into,” he said. “When you really look, we’re very, very fortunate that we have all three.”
The next step for Shale Crescent USA is to raise the capital to fund their project and hire a full-time sales team.
“We’re getting ready to raise the funds to hire a full-time staff, and we’ve been pretty successful in our fundraising,” James said. “What we have here now is a world-class asset, and our goal is to let the world know that we have this asset … It’s an exciting time to be here.”
July 13: Cleveland.com (full link below)
(Bellaire) Ohio ethane cracker plant closer to reality on former FirstEnergy property
The Thai petrochemical company considering Southeast Ohio as the future site of $6 billion ethane “cracker” plant has bought a portion of the land it will need.
PTT Global Chemical America has paid FirstEnergy Corp $13.8 million for a 168-acre parcel overlooking the Ohio River in Dilly’s Bottom, an unincorporated area in Belmont County.
The purchase does not guarantee the cracker will be built, said a company spokesman. PTT Global has said it will make its final decisions on the project by the end of this year. PTT Global has been considering the project for about four years.
FirstEnergy demolished its old coal-and-oil-fired R.E. Burger power plant and cleaned up the site in the fall of 2016.
The company took a $14 million loan from JobsOhio, a private, non-profit corporation, to do the demolition and cleanup work.
Under the terms of the loan, JobsOhio forgave the loan when FirstEnergy could show proof that it had the work done properly and had paid for it, something PTT Global also needed to know. That occurred in June, said FirstEnergy spokeswoman Jennifer Young.
FirstEnergy and PTT Global signed the sale agreement on June 8, she said. The deed transfer was recorded on June 30, according to documents on file at the Belmont County Recorder’s Office. No announcement was made.
“It’s not all the property that PTT Global will need, but it’s an essential piece of property,” said Dan Williamson, spokesman for PTT Global and a vice president at Columbus-based Paul Werth Communications.
He cautioned that the land purchase does not guarantee that PTT Global will build the massive refining complex, creating 500 or more jobs and hundreds more in related industries.
“Even though the company has not made its final investment decision, they made the calculation that if they do go forward they will absolutely need the property,” he explained.
Estimates about how many acres PTT Global will need have varied, with some previously published reports stating such a refinery would need 400 to 500 acres.
Williamson said the company will not determine exactly how many acres it needs until it completes further analysis to determine how large a refinery to build.
“They don’t have a design yet and therefore they do not yet know how many acres they will need,” he said. “And the purchase does not mean the project is absolutely coming. There is still a lot to be figured out.
“What you can take it to mean is that they are very serious about the project and they want it to happen,” Williamson said.
Because an ethane cracker produces polyethylene, the basic building block of the plastics industry, the project has been a key initiative of JobsOhio and the Gov. John Kasich administration, which reasons that the cracker would lead to redevelopment of the state’s polymer industry, creating hundreds of additional jobs. It would also create thousands of temporary construction jobs.
A cracker would also use the state’s plentiful shale gas to create value here rather than see it fill pipelines for uses elsewhere.
Because of that economic development potential, JobsOhio has worked closely and will continue to work closely with PTT Global, said Matt Englehart, the development firm’s spokesman.
In addition to the $14 million loan-turned-grant that JobsOhio awarded to FirstEnergy last fall, the firm has made other grants totaling another $6.45 million to spur development of the cracker project.
- A $1.45 million economic development grant to PTT Global last month to help with the purchase of the FirstEnergy property;
- A $2 million revitalization grant to FirstEnergy Generation, LLC, in June 2016 in connection with the closing of Burger;
- A $3 million revitalization grant to Ohio-West Virginia Excavating Co. in June 2015. The company owns property near the former FirstEnergy property that PTT Global may need for the project. PTT Global has an option to buy the land.
July 12 by CNBC (full link below)
Appalachia joins the race for the multibillion-dollar petrochemicals boom
- The Appalachian region is beginning to attract investment in petrochemical facilities.
- Growing natural gas production in the region is a major draw for chemical companies, which use fossil fuel byproducts to make plastics.
- A second petrochemical hub in Pennsylvania, Ohio, Kentucky and West Virginia would compete with facilities on the U.S. Gulf coast and create thousands of jobs.
The natural gas boom has enriched northern Appalachian states, and now the region reeling from the decline of the coal industry is hoping the surge in fossil fuel production will help it feed the world’s growing demand for plastics and chemicals.
The U.S. shale drilling revolution is fueling a wave of investment in U.S. petrochemical plants, the facilities that use byproducts from oil and natural gas production to create the building blocks for plastics.
Since 2010, 301 chemical industry projects worth $181 billion have been announced in the United States, according to the American Chemistry Council, a trade group representing U.S. chemical companies.
“In our opinion, we’re going to struggle to meet that level of demand growth, even with all the assets we see going in in North America.”-Mark Eramo, IHS Markit vice president of global chemical business development.
Appalachia’s share of the planned investment is relatively small, at roughly $16 billion. But the American Chemistry Council and regional boosters believe states like Pennsylvania, Ohio, Kentucky and West Virginia are positioned to capitalize on growing demand for plastics around the world.
“It’s really a race to capture global share,” said Paul Boulier, vice president of industry and innovation at Team NEO, a northeast Ohio economic development organization. “From our little part of the world, we want to get a bigger piece of that pie.”
Among the slices it has already carved out are a Royal Dutch Shell petrochemicals complex along the Ohio River in Beaver County, Pennsylvania. Shell expects to begin construction next year and says the project will create 600 permanent positions and about 6,000 construction jobs.
Down the Ohio River, another multibillion-dollar facility could rise in Belmont County, Ohio. Thailand’s state-owned oil-and-gas giant PTT is behind the project and says it will make a final investment decision by the end of the year.
This would provide much needed relief for Belmont County, where the unemployment rate was 5.7 percent in May — among the highest in the state. The median annual income was $43,833 between 2011 and 2015, more than $10,000 below the U.S. median.
But Boulier and other boosters believe the two facilities are just the start. The American Chemistry Council envisions a regional transportation and storage hub that could create tens of billions of dollars in economic expansion and about 100,000 jobs.
The formula is fairly simple. The Marcellus and Utica shale formations, two of the biggest natural gas fields in the United States, largely lie beneath Pennsylvania, Ohio, West Virginia and New York. The surrounding Rust Belt is also home to many of the country’s plastics manufacturing factories.
What’s missing is the link between the two: the massive plants that turn natural gas byproducts into the inputs needed to manufacture plastic products.
The plants, called crackers, heat natural gas byproducts, like ethane and propane, in order to break them down, or “crack” them, in industry parlance. What comes out is base chemicals, like ethylene and polyethylene, the most widely used plastic, which is shipped in pellets that are then shaped into a range of consumer and industrial goods.
The Shell facility near Pittsburgh will use ethane produced in the Marcellus and Utica basins to make 1.6 million tons of polyethylene a year. The oil major notes that “more than 70 percent of North American polyethylene customers are within a 700-mile radius of Pittsburgh.”
Shell will no doubt seek to tap that domestic market, but the crackers already supplying the region will certainly fight to keep their share, said Steve Zinger, vice president of chemicals at energy consultancy Wood Mackenzie. The result: Much of the new net output will likely be exported, he said.
This is one reason big companies with logistics experience like Shell will continue to drive the petrochemicals expansion, Zinger said. Already, plans for small crackers in the Appalachian region have been scrapped or delayed.
“You really need those economies of scale. You can’t just go on the feedstock alone,” Zinger told CNBC.
“It’s one thing to have the technology to convert ethane into a chemical, but then you have to say, What am I going to do with this chemical? How am I going to move it to market?”
A world hungry for plastics
The good news is the long-term prospects for the petrochemicals industry remain strong, according to Zinger. Rising demand for food packaging and consumer products in emerging markets will offset the push for more recycling and judicious use of plastics in the developed world for years to come, he said.
Demand for ethylene typically grows at about 1.3 times the rate of global economic growth, said Mark Eramo, vice president of global chemical business development at IHS Markit. Assuming 2.5 percent to 3 percent GDP growth, demand for ethylene will rise by 5.5 million to 6 million tons a year, he said.
“In our opinion, we’re going to struggle to meet that level of demand growth, even with all the assets we see going in in North America” and around the world, he said. “We don’t see any dark clouds, barring an economic meltdown.”
While the Appalachian region has convenient access to natural gas, Eramo believes companies investing billions of dollars into crackers will continue to think twice about investing there because it lacks the network of plants, pipelines and storage facilities present in the Gulf. Companies like Exxon Mobil and Dow Chemical have opted to build new facilities in the Gulf.
The American Chemistry Council acknowledges it’s uncertain how a second transportation and storage hub in Appalachia would be financed. It’s something of a chicken-and-egg situation: The region needs infrastructure to attract petrochemical facilities, but it’s hard to get financing for infrastructure without the facilities.
The council created a scenario in which the region builds a hub, including five world-scale crackers, storage facilities and pipelines. It found it would require $32.4 billion in capital investment.
Earlier this year, West Virginia Sen. Shelley Moore Capito introduced legislation that directs the Energy and Commerce departments to study the feasibility of building an underground ethane storage and transportation hub in the Appalachian region.
It took about 60 years for the Gulf to develop into the highly integrated petrochemical hub it is today. Boulier believes the Appalachian region can develop one in much less time, maybe just 15 years, partly by planning the system as a whole. The United States has also become a leader in producing cheap natural gas byproducts in recent years, making it attractive to investors, he said.
States eager to grow jobs are likely to offer generous sweeteners. The tax incentives offered to Shell to build the Beaver Country cracker amount to $1.6 billion over 25 years, Pennsylvania lawmakers estimated.