Seeking Alpha

Shell's planned Pennsylvania ethane plant remains in limbo

  • The location of Shell's (RDS.A, RDS.B) proposed multi-billion-dollar petrochemical plant near Philadelphia continues to sit vacant, despite nearly $2B in state tax incentives, and analysts wonder whether new pipelines envisioned to move Pennsylvania ethane to the Gulf coast could erase Shell's advantage and torpedo its plans entirely.
  • Since Shell proposed its plant, three pipeline projects that would channel Marcellus Shale ethane southward have been announced: Kinder Morgan Partners (KMP), Enterprise Products Partners (EPD) and Williams Partners (WPZ) have said they will build lines carrying 600K bbl/day of ethane and other liquids from the Marcellus down to Texas and Louisiana.
Comments (12)
  • It will never be built there. The wells are declining at astounding rates in PA and Ohio. I can't see them making an investment like that based solely on the Marcellus and Utica.
    18 Oct 2013, 08:02 PM Reply Like
  • Production declines are inherent traits of any reservoir, conventional or unconventional.

     

    Decline rates in (all) unconventional reservoirs are steeper vs those associated with conventional reservoirs and yet the unconventional reservoirs can be very economic & profitable. So decline rate, in and of itself, is not THE reason to change a decision such as this.

     

    More likely, competitive pressures (as per the above bullets) and / or a strategic reassessment are root causes of any significant change in plans.
    19 Oct 2013, 12:54 PM Reply Like
  • zebra,
    Yes there are large decline rates....... from monster high initial rates.

     

    So that in and of itself means very little. A lot of folks see decline rates and think its game over - but if you produce twice as much initially then you have to expect a higher decline rate. Actually many of these wells will be producing for a long time and are very economical.
    19 Oct 2013, 01:02 PM Reply Like
  • Hi Zebra...do you have a link that shows the decline rates? Thanks
    18 Oct 2013, 09:02 PM Reply Like
  • Would also be interested to know if a "depleted" well could be reopened if nat gas rose to $6-8 ??
    18 Oct 2013, 09:19 PM Reply Like
  • The likelihood of any shale reservoir being truly depleted of hydrocarbons is very small. It is more appropriate & common to use 'abandonment rate' which is tied to economics.

     

    Yes it is possible to re-work a shut-in well and re-establish (economic) production.
    19 Oct 2013, 12:45 PM Reply Like
  • Thanks - I kinda thought so. I know of several "abandoned" coal mines that were re opened. I am assuming you are experienced in the field of production. It is my belief, right or wrong : ) that CNX made a great purchase of the Dominion acreage. Do you have an opinion ??
    20 Oct 2013, 12:39 PM Reply Like
  • I've not studied the deal in detail, though strategically, looks to be good.
    20 Oct 2013, 03:52 PM Reply Like
  • I would love to see that depleted well data ?
    19 Oct 2013, 10:04 AM Reply Like
  • We are swimming in ethane, with production forecasts being increased almost daily. Shell is slow, methodical, and has proven lately to be not particulary good at identification and implementation of shale opportunity. We are in very serious need of more ethane crackers, and they will be built because of the advantage we find ourselves having relative to the world petrochemical industry.
    19 Oct 2013, 11:05 AM Reply Like
  • Yes, I want someone to increase demand for ethane!!!!!

     

    Ethane rejection is at all time highs and there is no change in sight!
    19 Oct 2013, 01:03 PM Reply Like
  • At least two possible changes in sight.
    Cracker projects online by 2017 but careful what you wish ...
    http://bit.ly/1ajiMK3
    28 Oct 2013, 01:57 AM Reply Like
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