Polyolefins

Sarnia cracker could hinder Shell’s US development

ICIS News : 18-Apr-12 00:22

By Sheena Martin

NEW ORLEANS, Louisiana (ICIS)–The lack of infrastructure for Shell’s potential northeast US cracker provides an opportunity for NOVA Chemicals to expand its Corunna ethylene facility and displace Shell’s ethane supply, a consultant said on Tuesday.

“If I were NOVA’s CEO, I would not want Shell in my backyard,” said Peter Fasullo of consulting company En*Vantage, on the sidelines of the Gas Processors Association annual meeting in New Orleans.

US-based Shell chose Monaca, Pennsylvania, as a site for its potential world-scale petrochemical complex, which would use ethane from the Marcellus shale in the US northeast.
Shell is years away from making a final decision on funding a new cracker, according to Peter Voser, the company’s CEO. Shell could have a cracker completed by 2017 if it began construction in 2014.

Currently, there are no ethane crackers or storage sites in the Marcellus region.

Fasullo said NOVA would have a more reliable destination for ethane if it expanded its Corunna cracker capacities in Sarnia, Canada.

The expansion would require less money and less time than Shell’s project, Fasullo said. He said a vast expansion at Corunna could be completed years before Shell completes construction of a world-scale facility.

Sarnia has advantages that Shell would lack in Pennsylvania. Sarnia, located in Ontario, is an established petrochemical region, with more than 30% of the petrochemical capacity in Canada, second behind Alberta, according to Statistics Canada.

The Sarnia and Windsor regions in Ontario have salt caverns to store hydrocarbons and liquefied petrochemicals such as ethane. There are 73 active caverns in Ontario with total capacity of 12.6m cubic feet, according to the Ontario Ministry of Natural Resources.

NOVA’s Corunna cracker in Sarnia will run on ethane from the Marcellus shale basin. An existing Sunoco pipeline from the Marcellus to Sarnia will transport 40,000 bbl/day of ethane to NOVA’s cracker, and an additional 10,000 bbl/day to the region for other plants.

In addition, NOVA will upgrade the feedstock capability at the cracker by the end of 2013 to 100% of natural gas liquid (NGL) feeds, company CEO Randy Woelfel said during the company’s fourth–quarter conference call.

http://www.icis.comNOVA said the ethane feedstock commitments would assure long-term competitiveness for the company.

In addition to salt caverns, Imperial Oil has a refinery and petrochemical complex in Sarnia. The complex produces a wide range of products, including polyethylene, solvents, olefins and aromatics, the company said.

If Shell’s world-scale plant shut down for maintenance or because of a power outage, the company would be forced to reject ethane because it could not sell to another chemical complex and has no ethane storage in the region, said Fasullo.

Accordingly, producers are more cautious to make supply commitments to a possible ethylene plant in the Marcellus, said Fasullo.

By Sheena Martin
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