The 'Green New Deal' has no answer to the petrochemical business
The Gulf Coast has become home of one the largest producers of a common plastic: Shell fired up its fourth alpha olefins unit at its chemical plant in Geismar, La., the company said Monday.Even if the liberals could force everyone to drive electric vehicles, they would still need petrochemical products to make the vehicles from dashboards to tires. This industry also produces products that make modern farming possible.
The multibillion-dollar expansion adds 425,000 metric tons per a year in capacity to the chemical manufacturing site, bringing its total alpha olefin production up at Geismar to more than 1.3 million metric tons per a year. That makes it the largest alpha olefins producing site in the world, the company said.
Alpha olefins are key ingredients in consumer goods such as laundry detergents, motor oils and hand soaps.
The project represents a major expansion of Shell's petrochemical business in the region and will support the Deer Park facility in the greater Houston area.
The new unit is part of Shell's push to integrate the downstream side of its business. The company said the Geismar site is supported with advantaged ethylene feedstock from Shell's nearby Norco, La., and Deer Park manufacturing sites, enabling the site to respond to market conditions.
Ethylene is used as a feedstock for alpha olefins. Shell previously had been selling much of the U.S. ethylene it produced., but the addition of the alpha olefins unit means the company can benefit from more integrated downstream operations, noted Steve Zinger, vice president of chemicals at the analyst research firm Wood Mackenzie.
"In Shell's case, they are a bit long on ethylene so this is one way they could consume some of that ethylene and convert it to a usable prothduct that could be sold into the polyethylene business and/or exported into world markets where demand growth still growing," Zinger said.
The Geismar alpha olefins unit started up in December, but the Houston-based U.S. operations of Shell announced the startup Monday.
Shell's chemical business is already considering another expansion project for the Geismar plant, according media reports. Shell is reportedly in the early evaluation stage of a $1.2 billion expansion of a project that would add a "world scale" mono-ethylene glycol unit to the Geismar site, The Advocate reported.
Zinger also pointed out that the alpha olefins in Louisiana could also feed into the new plastic chemicals complex Shell is building in Pennsylvania. Alpha olefins are often funneled into producing polyethylene products. The company is building an ethane cracker in Pennsylvania, which processes the natural gas liquid ethane into ethylene, which will be the feedstock for on-site production of polyethylene, the world's most common plastic.
The projects are part of dozens petrochemical projects that have come online in recent years thanks to the shale boom providing cheap supplies of natural gas, which is a feedstock for chemicals used in a variety of plastics and consumer goods. Since 2010, the American Chemistry Council estimates there has been about $202 billion worth of capital investments announced in the U.S. petrochemical industry, with about $170 billion of those popping up along the Gulf Coast.