The Ohio Valley Region is the most profitable location to build a petrochemical plant, exceeding the potential of the Gulf Coast.
The Ohio River valley region of Ohio, West Virginia and Pennsylvania, branded the Shale Crescent USA*, is the most profitable region to build a petrochemical plant, exceeding the potential of the Gulf Coast (IHS Markit). This is a dramatic paradigm shift from the Gulf Coast of the United States, long recognized as one of the world’s primary petrochemical hubs. An independent study recently conducted by IHS Markit, on behalf of the Shale Crescent USA titled “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast” reveals that with reduced delivery costs and low-cost NGL supply, a petrochemical plant located in the Shale Crescent USA would generate a four-times-higher net present value cash flow than a comparable investment in the Gulf Coast.
According to IHS Markit, prior studies have estimated the region has sufficient ethane feedstock to support up to five world class ethane cracker plants, including the Shell Chemicals plant under construction in Monaca, Pennsylvania. The study by IHS Markit also concluded that the Shale Crescent USA advantages over the Gulf Costs include:
Access to large supplies of low-cost ethane creates a viable advantage for an ethylene project in the Shale Crescent USA region. The benefit of low-cost ethane is augmented by the region’s close proximity to over 70% of the nation’s polyethylene market. For the first time, market and supply are in close proximity.
A day’s drive to over 70% of the nation’s polyethylene industry and 50% of U.S. Consumption.
MAGNAM Innovation Park provides a location for conducting business that is closely aligned to the opportunities being created by the abundance of natural gas associated with the Marcellus and Utica Shale formations. MAGNAM Innovation Park is located in close proximity to the split of two major U.S. Interstate Highways (Interstate 70 runs east-west from Baltimore, Maryland to Utah and Interstate 77 runs north-south from Ohio to South Carolina).
The region, branded as the Shale Crescent USA, is now the most profitable place to build a petrochemical plant, exceeding the potential of the Gulf Coast (IHS Markit). This is a paradigm shift so dramatic that for the first time in over a hundred years, the Gulf Coast of the United States is no longer the most economical or centrally located region for high-energy intensive manufacturers to locate. In fact, an independent study recently conducted by IHS Markit, on behalf of the Shale Crescent USA economic development organization, titled “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast” reveals an ethylene project in the Shale Crescent USA region will produce a $3.6 billion cash flow advantage versus the Gulf Coast over a 20-year life of project.
MAGNAM Innovation Park is uniquely positioned to help high-energy intensive industries take advantage of this opportunity where like-minded companies can cooperate, benefit, and prosper.
Watch the video from Shale Crescent USA that summarizes the findings from the recently completed IHS Market Study “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA Versus the US Gulf Coast.” The study concludes that an ethylene project in the Shale Crescent USA region will produce a net present value (NPV) EBITDA of $930 million over the life of the project, compared to a NPV of $217 million for a similar project on the U.S. Gulf Coast. This represents an NPV cash flow advantage of $713 million for an investment in the Shale Crescent USA – over four times higher than in the U.S. Gulf Coast project. Over a 20-year period, that divergence is expected to equate to a pre-tax cash flow advantage of some $3.6 billion.*
* Information presented and disseminated by Shale Crescent USA as part of any presentation or discussion, whether in the form of written material, visual or oral presentations is intended to inform listeners and readers. The ideas and opinions expressed are formed based upon sources,research and analysis which are considered reliable, but the accuracy and completeness of such information are not warranted, nor are the opinions and statements, that are based upon them, and, to the extent permitted by law, Shale Crescent USA shall not be liable for any errors or omissions or any loss, damage, or expense incurred by reliance on any information or any statement made or presented in whatever form. In particular, please note that no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, forecasts, estimates or assumptions; and, due to various risks and uncertainties, actual events and results may differ materially from statements and opinions noted herein, as well as written material authored or compiled by anyone other than Shale Crescent USA, its officers, employees, upon which said written materials such statements and opinions of Shale Crescent USA and its presenters are based. Presentations of Shale Crescent USA whether in oral or visual form are not to be construed as legal or financial advice and use of or reliance on any such presentations is and shall be entirely at the risk of those who choose to act upon them.
*IHS Markit: The Shale Crescent USA now produces the same volume of natural gas liquids as the entire of the U.S. produced in 2010. Production is expected to increase from 0.53 million (B/D) in 2017 to 1.37 million (B/D) in 2040
IHS Markit: Ethane costs are 32% less in the Shale Crescent USA than the Gulf Coast
IHS Markit: Polyethylene cash costs are 16% lower in the Shale Crescent USA than on the Gulf Coast, and delivered costs are 23% lower
IHS Markit: The pre-tax cash flow of a Shale Crescent USA project from 2020 to 2040 amounts to $11.5 billion, compared to $7.9 billion for a similar Gulf Coast project