Shale Crescent offers several advantages for investors
MORGANTOWN — As time goes on and natural gas industries take off in the Shale Crescent of West Virginia, Ohio and Pennsylvania, more players from around the world are starting to see the potential and not just in energy production.
Greg Kozera, director of marketing for Shale Crescent USA, said in the aftermath of a study on Appalachia’s natural gas resources that Japan is looking to import more natural gas since natural disasters in 2011 forced the shutdown of that nation’s nuclear power plants and a switch back to coal, oil and natural gas.
However, Kozera said it doesn’t stop there. China, Thailand, South Korea, Taiwan and, to a lesser degree, Europe have expressed growing interest in the Shale Crescent because the polyethylene pellets produced from natural gas can be used to feed the manufacturing industries in these countries that need reliable supplies of plastic.
“Clearly, people are understanding, or beginning to understand, what we have as far as resources. So that’s what’s encouraging,” he said. “We’re seeing activity. We’ve got cheap, abundant natural resources — natural gas, natural gas liquids — and that’s a blessing.”
Keith Burdette is president of the Parkersburg-based Polymer Alliance Zone. He has attended several National Plastics Expos, the most recent of which was held in Orlando featuring 65,000 industry professionals and 2,000 vendors representing 128 countries.
Burdette noted a growing interest in what the Shale Crescent has to offer the rest of the world, more now than ever before.
“We have had more leads from this week’s Expo than any other,” he said. “People are looking for us and coming to our booth.”
Kozera said Shell’s polyethylene cracker plant under construction near Pittsburgh is intended to support domestic plastics industries, but further development of this infrastructure in the Shale Crescent offers huge advantages over the Gulf Coast due to shipping costs because the gas and liquids have to be shipped there and refined before being moved again to where the customers are. Even the Permian Basin, while still in Texas, is more than 500 miles from the facilities in Houston, he explained.
Furthermore, transportation alone can sometimes make up 60 percent of the costs in getting product to market when factoring in the journey it has to take from Appalachia to the Gulf Coast and back north. On top of that, Kozera noted that transporting the product doesn’t increase its value, so companies can’t increase the price to compensate.
Kozera noted Appalachia is not only closer to more of the market but is not in the path of major storms, such as Hurricane Harvey.
“They’re trying to get into this market and they can go anywhere they want to,” Kozera explained. “When we can tell them, ‘You can come here. This is the most profitable place to build your facilities,’ they’re all over it. It makes perfect sense to them. I think that’s why we’re seeing a lot of what we’re seeing.”
However, he said infrastructure is still a concern but the region is moving in the right direction and there is still time since building these new facilities takes years just to plan let alone build. What’s important for West Virginia, Kozera said, is to create a comfort factor for these companies by staying committed to the Appalachian Storage, Trade Hub and supporting pipelines.
“These are major, major investments and in some cases, literally, if you tell your CEO to build some place your career is on the line,” Kozera said. “If it’s a smaller company it may be betting the company, on where they put some of these plants. It really is important that they put a lot of faith in what we’re saying and what we’re doing.”
In the end, Kozera said Shell’s ongoing construction in Pennsylvania (with 2,000 workers already on site) serves as a confidence booster to the companies in Asia looking to set up shop.
This article was authored by Conor Griffith for The State Journal. Click here to read it on the publication's website.