Shell seeks bids for ethane feedstock for planned Appalachian cracker

Pittsburgh (Platts)--27 Aug 2013 321 pm EDT/1921 GMT

Shell Chemical has begun taking bids to secure ethane from Marcellus Shale operators for its proposed world-class petrochemical plant in Beaver County, Pennsylvania, the company said Tuesday.

Shell is accepting bids for feedstock from August 27 through October 4.

The company has said that securing additional ethane supply for its multi-billion dollar ethane cracker is one of the "key components in determining the next steps as part of the ongoing site evaluation process," according to Shell spokeswoman Kimberly Windon.

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Shell has extended its land option agreement twice with Horsehead Corp for the property in an industrial park in Monaca, located roughly 30 miles northwest of Pittsburgh near the borders of West Virginia and Ohio. The option on the land now expires in December.

If the complex is built, Shell Chemical said its upstream affiliate, Shell Western Exploration and Production Inc., would provide some of the ethane supply for the proposed petrochemical complex.

The company has already secured supply commitments from Consol Energy Inc, Hilcorp Energy Company, Noble Energy Inc. and Seneca Resources Corp.

The bid round requires a confidentiality agreement with Shell Chemical, a subsidiary of Royal Dutch Shell.

"Shell Chemical still has several critical milestones to achieve before making a final investment decision on whether to proceed with construction of this proposed complex," Windon said.

A world-class cracker takes five years to build. Such a facility produces about 1 million tons of ethylene from ethane annually, and requires up to 80,000 b/d of ethane, according to Shell.

Shell's proposed Beaver County plant is not the only project aiming to capitalize on ethane produced from the liquids-rich Appalachian Basin. Others include pipeline projects proposed by Enterprise Products Partners, Sunoco Logistics and a partnership between Williams and Boardwalk Pipeline Partners to take NGLs to petrochemical markets in the US Gulf Coast, the East Coast, and Sarnia, Ontario.

--Stephanie Ritenbaugh,

--Edited by Lisa Miller,

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