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Institute for Energy Economics and Financial Analysis (IEEFA)'s newest analysis on the petrochemcial buildout of Appalachia

PTTGC Petrochemical Complex: Unacceptable Risk for Investors and Ohio The corporate sponsors of a proposed plastics-manufacturing petrochemical complex in Belmont County, Ohio,have repeatedly delayed making a final investment decision on whether to go forward with the project. Recently,they admitted that they cannot provide a firm deadline—at all—for that decision because of the coronavirus pandemic. Moreover,industry trends indicate that even if the project is built, it will encounter major problems.This is not good news for Ohio. Its privatized economic development arm has already sunk $50 million into the project in the form of “pre-development grants,” even though PTTGC has not committed to move forward. Thailand-based PTT Global Chemical (PTTGC) and South Korea-based Daelim, which have been touting the project for about eight years, face several major hurdles to success, constituting an unacceptable level of risk that is likely only to worsen.Oversupply and competition from a global industry-wide plastics buildout is likely to drive down prices—and revenues—through at least 2026. Plastics prices are already 40%lower than when the project was originally developed over 2010-2013. This trend(seen in the chart at right) stands to be compounded by the global economic turmoil created by the COVID-19 pandemic, pushing profit margins far below investment targets. Conditions for the petrochemical business in all probability are going to get worse. Slower economic growth is expected, and difficulties across the petrochemical industry were evident even before the recent precipitous drop in oil prices and the crippling impacts of the COVID-19 pandemic. The risks to petrochemical ventures today are greater than ever, and the market for plastics is not likely to turn around in the near term.

PTTGC Petrochemical Complex:A High-Risk Deal for Investors and Ohio Residents Alike Problemsassociated with the PTTGC project in Belmont County include:

•The reliability of feedstock for the project’s ethane cracker is in question. The fossil fuel energy sector is in severe distress today, and the horizontal drilling and hydraulic fracturing business is no exception. Most fracking ventures are operating in the red and at risk of bankruptcy. This is true of operators across the Marcellus and Utica shale basins, from which the PTTGC complex would seek to secure its feedstock supply of ethane.

-Economic conditions across the board are at elevated risk of weaker market prices, undermining plastics-production operations as a whole and making expansions like the PTTGC proposal riskier than ever.

•Any new project will face vigorous and perhaps devastating competition from existing domestic and global petrochemical operations.

•The abrupt recent fall-off in global GDP suggests that purported optimism in are bounding plastics market is completely misplaced.

•Shifting government policies regarding foreign investments in U.S. assets are creating significant financial uncertainty.

•Community opposition will present a risk over issues such as air pollution, including “fugitive” emissions which,rather than emanating from tall stacks,leak from equipment and processes closer to the ground. Under the PTTGC proposal, it would not be required to place monitors at its fenceline to check for contaminants escaping into the community. The proposed PTTGC complex is a losing proposition. It is not clear that the sponsors will proceed with it,despite receiving permits. Moreover, public policy decision-makers—rather than throwing good money after bad—would do well to consider that economic development funds could be better spent on projects with a brighter outlook.

Contact: Kathy Hipple, IEEFA financial analyst,, (917) 584-0633

This is a blog post written by our partner, Sean O'Leary. His professional take on the outlook for the Ohio cracker is a must-read for all Ohio Valley citizens.

My wife suggested that I title this, "Tales of The Shale Croissant" (… because, while it's tasty to politicians, it's mostly air and has almost no nutritional value).  But, decorum requires otherwise, so "shale crescent" it is -- a phrase that, to proponents of natural gas and petrochemical development in the Ohio Valley and Western Pennsylvania, connotes an industrial boom beginning with an already accomplished explosion of natural gas production, soon to be followed by a buildout of petrochemical processing on a scale comparable to that of the Gulf Coast, and concluding with a blossoming of plastics and polymer manufacturing businesses that will provide tens or even hundreds of thousands of new jobs. But, just as many regional policymakers averted their eyes from the devastating effect the fracking boom would have on the coal industry, they now avert their eyes from the cancellation of the proposed ASCENT cracker in Wood County, West Virginia; the now annual delays (most recently two weeks ago) in a final investment decision for the proposed Belmont County, Ohio cracker; and clear economic indicators, which show that their vision of petrochemical prosperity is likely to be a pipe dream.  In this series, we'll explore those indicators, which suggest that:

  • The much-ballyhooed buildout of four to five ethylene crackers in the Marcellus/Utica region will almost certainly not happen. In fact, it's doubtful that any more Appalachian crackers will be constructed following completion of the Shell facility in Beaver County, Pennsylvania.

  • If the crackers are not built, the economic rationale for support facilities like the nearly-as-ballyhooed Appalachian Storage Hub, largely evaporate.

  • And, even if the crackers and storage facilities are built, they're very unlikely to give rise to "game-changing" increases in manufacturing and jobs.

For these reasons, hundreds of millions of taxpayer dollars being spent on efforts to bring about the petrochemical boom are likely being squandered.  Meanwhile, more feasible and sustainable economic development strategies are ignored and in some cases actively resisted because they are perceived as threats to the imagined petrochemical nirvana.  So, if concerns about the damage pollution and greenhouse gas emissions would do to people in the region and to the planet are the reasons a petrochemical boom shouldn't happen in the Ohio Valley and Western Pennsylvania, the economic and technological concerns presented here are the reasons it won't happen, or at least it won't happen on a scale that will deliver anything like the promised growth in jobs and prosperity.   Why the petrochemical boom is an economic non-starter Visions of petrochemical prosperity in the Ohio Valley and Western Pennsylvania are built on two deeply flawed assumptions:

  1. Ethane derived from the region's natural gas will maintain a large and permanent cost advantage over alternative feedstocks for the manufacture of ethylene and polyethylene, the raw materials for the manufacture of plastics and other substances.

  2. Most of the ethylene and polyethylene produced by crackers in the region will be consumed by nearby manufacturers who will flock here in order to be near their source of supply. 

Here's why the assumptions are flawed. Under foreseeable economic conditions, additional crackers won't be sufficiently profitable to warrant the multi-billion dollar investments required to build them Proponents of the "shale crescent" vision talk as though there is a seamless and symbiotic relationship between natural gas producers on the one hand and petrochemical and plastics manufacturers on the other.  There is not.  One industry's revenue-generating product, ethane, is the other industry's cost-generating raw material.  Ethane producers want to maximize the price of their product and petrochemical and plastics manufacturers want to minimize it. Markets generally resolve this kind of conflict by establishing an equilibrium price at which the producer makes an adequate profit and their customers can charge prices for their value-added products that are well in excess of the cost of raw materials. The problem is that, in this particular market, there are two additional players -- oil companies and ethylene cracker operations in other parts of the country and the world -- whose actions can make a price that makes it impossible for both buyers and sellers of ethane in the Marcellus region to earn adequate returns.  That's precisely what is happening right now and it's likely to keep happening. Prospective investors in potential Appalachian crackers are seeing immense growth in competition Due to the recent plunge in the price of oil, crackers along the Gulf Coast and in other parts of the world that process oil-based naphtha into ethylene and polyethylene are taking market share from ethane crackers.  When the price of oil is well above $50/barrel, ethane holds a substantial cost advantage for the production of ethylene and polyethylene.  But, when the price of oil drops into the $30's and $40's (never mind less than $20, where we sit right now) the cost advantage diminishes to the point that margins may not be sufficient to motivate investors to make the $5 billion-plus investments required to build new ethane crackers.  The best estimates suggest that the price of oil will return to only about $40/barrel in 2021.  And, if the recent economic crisis and infighting in OPEC+ has permanently damaged the cartel's influence, then prices may not get that high. Prospective investors must also consider the fact that, regardless of the price of oil, oil companies are planning to invest more heavily in the petrochemical market as they see a flattening of demand for fuels.  The International Energy Administration recently projected that petrochemicals, which currently consume about 14% of oil production, will represent over 30% of the industry's growth over the next decade. Another source of increased competition for new Appalachian crackers is the immense growth in ethane crackers in other places. In just the last few years, ethane cracker capacity in the US, principally along the Gulf Coast, has increased by 50%, creating a condition of overcapacity that the Institute for Energy Economics and Financial Analysis (IEEFA) doesn’t see closing until 2026. The global buildout is even greater, with Wood Mackenzie forecasting a “meteoric expansion” of ethylene capacity in China over the next five years surpassing even the US expansion. This intensifying of competition is also reflected in IHS Markit's forecasts of a coming plunge in global cracker utilization rates. Not only will ethylene from oil and from other ethane crackers compete for market share, thereby driving down prices and profit margins, but the expanded fleet of Gulf Coast ethane crackers could also compete with Appalachian crackers for ethane coming out of the Marcellus region, which would have the effect of driving up costs and further squeezing profit margins.  That kind of regional competition for ethane will arise if, as many observers expect, the ongoing shakeout in the oil industry causes major shut-downs of oil and gas wells in the Permian Basin forcing the crackers that have already been constructed on the Gulf Coast to look to the Marcellus region for feedstock. The demand side of the equation is also in doubt Although they are not as severe as the competitive pressures that would confront any new Marcellus region cracker, there are also significant doubts about whether demand for plastics will be sufficient to warrant added capacity.  First, no one is certain how quickly economies and the plastics sector will recover from the current economic crisis.  But, in addition to general economic pressures, the plastics market is also especially susceptible to national and regional government actions to combat plastics pollution and climate change and, since the arrival of the Trump administration, unanticipated swings in trade policy. Petrochemical and plastics manufacturing are highly greenhouse gas intensive activities, which means they are highly vulnerable to emissions reduction policies such as carbon pricing and cap-and trade-schemes.  At the same time, both national and regional governments, including recently China, are enacting single-use plastic bans, bag bans, and other measures. None of these factors, either individually or collectively, is expected to reverse growth in the market for plastics, which is being driven by developing countries in Asia and, to a lesser extent, in Africa and South America.  However, looking forward from our present state of overcapacity, which is expected to last for another five years are so, even a slowdown in expected growth would have an outsize effect on decisions about adding yet more capacity.Next Installment:  Part 2 - Why "the shale crescent" can never become "the new Gulf Coast"

A group of organizations sent Goldman Sachs, a large investment agency, a letter before their April Shareholders meeting explaining the financial risks involved in funding the underground storage hub project that would feed the PTTG ethane cracker plant. GS has been in relationship with Energy Storage Ventures, the company proposing to build the underground storage in Monroe County, OH, just 12 miles south of the proposed cracker plant site. The company got their permits but they expired in March, 2020 and the project has not been started since PTTG has not announced a Final Investment Decision yet. We touched on the shaky financials of the industry and other major reasons why they should not continue to invest in this project. This letter was sent to local media outlets.

April 20, 2020

Goldman Sachs

200 West Street

New York, NY 10282 ATTN: Mr. David Solomon SUBJ: Investor Information for Shareholders Meeting 4/30/2020 Dear Mr. Solomon, For reasons described below, we ask that West Street Energy Partners, LP private equity fund be instructed to inform shareholders of the extremely risky nature of the Mountaineer NGL Storage Project and consider terminating its development agreement with Mountaineer NGL Storage, LLC. As you may be aware, the feasibility of the Mountaineer Storage Project is contingent on the construction of a proposed ethylene cracker plant in Belmont County, Ohio, which is supported by PTT Global Chemical and Daelim Chemical. However, in recent weeks a consensus has emerged among both rating agencies (Moody’s and Fitch Ratings) and industry analysts (IHS Markit and the Institute for Energy Economics and Financial Analysis) that under foreseeable market conditions the cracker plant is too risky a proposition to go forward. The reasons for this shared conclusion pre-date the recent Saudi/Russian dispute over oil production and the COVID-19 crisis, although those events exacerbate the reasons and make them apparent to all. • The price of polyethylene, the proposed cracker’s principal product, was plunging to record lows before the recent crises and has plunged further since. • The market for polyethylene has, for the first time in history, entered a period of sustained oversupply due to a massive expansion of capacity along the Gulf Coast and in China. • Competition in the plastics market is growing as major oil companies try to compensate for stagnant growth in fuel markets by competing more aggressively in petrochemicals. • Growth in the demand for plastics is expected to slow as federal, state, and local governments adopt policies to counteract climate change and to reduce plastics pollution, such as bans on single-use plastics like those recently imposed in China and enacted by many state and local governments in the US. • There is widespread uncertainty about how soon economic recovery will begin, how robust it will be, and the long-term effect on the plastics and petrochemical markets. The degree to which the financial viability of the Mountaineer storage facility is dependent on the construction of the PTTGC cracker and the plastics market was expressed most powerfully by David Hooker, president of Energy Storage Ventures and Mountaineer Storage, LLC. Hooker who said this in an April 2019 Associated Press story: "To me, the key is PTT Global," Hooker said, adding that he ‘can't imagine’ the plant operating without ethane storage.” The AP story then quoted another industry expert on the financial importance of the PTTGC cracker to storage projects in the region. Appalachia Development Group's (Steve) Hedrick agrees with Hooker's assessment. Without the PTT-Daelim partnership or another regional petrochemical plant, Hedrick said his storage facility project probably won't be viable. “The two go hand in glove,” Hedrick said. “We need both at the same time. Without customers, it's awfully hard to make a business case.” In short, any financial justification that may have once existed has now evaporated for the proposed cracker plant and for the associated storage facility, with which West Street Energy Partners has a development agreement. Therefore, we ask in the interest of your shareholders that you advise them of the risks associated with the project and consider terminating the agreement. We also ask this of you as residents of the Ohio Valley, who face the prospect of huge greenhouse gas emissions as well as increases in air and water pollution that will have serious effects on our health and that of our children if the cracker and storage facility are built. Goldman-Sachs won widespread acclaim in 2019 when it issued its “Environmental Policy Framework”, and announced it would no longer underwrite coal projects and would conduct “enhanced due diligence” for projects involving “new unconventional oil & gas and hydraulic fracturing.” In the spirit of the Goldman-Sachs Environmental Policy Framework and in light of the unfeasibility of the Mountaineer Storage project, please protect your shareholders and residents of the Ohio Valley by withdrawing from this economically unjustified and destructive project. Sincerely, FreshWater Accountability Project

FracTracker Alliance

Ohio Valley Environmental Coalition

Concerned Ohio River Residents

Students for Energy Justice Oberlin College


The organization who manages this page and who is leading the efforts pertaining to protecting the Ohio River Valley from a petrochemical build-out is called Concerned Ohio River Residents(CORR). Click HERE to view our Facebook page. We are Ohio Valley citizens concerned about the extremely detrimental toll that the PTT Global ethane cracker plant will take on our health, air, water and future if it is built, and we are organizing an effort to stop it from coming to the beautiful Ohio Valley. This website is dedicated to informing the public about the proposed project and the plethora of negative effects that it will bring if built, as well as being a resource that provides anyone the tools and connections needed to get involved. We are supported by our partners who are other grassroots organizations (some national, some more local).

A petrochemical and refining company named PTT Global Chemical has proposed to build an ethane chemical "cracker" plant in Dilles Bottom, OH- about 5 miles south of Shadyside, OH and directly West across the Ohio River from Moundsville, WV. This is a Thailand-based company. Cracker plants essentially take ethane produced from fracked gas and turn it into plastic pellets that will then be shipped to other companies that will use them to create plastic products. Other products are created at these types of facilities as well, however the majority of the process will be for plastic creation at this plant if it is built. Please see the 'What is a Cracker Plant?' tab to learn more about the physical process. The Plant IS NOT a done deal yet. Local opposition is important at this time. Please see the "Get Involved" tab to explore other ways your voice can be heard. The Ohio Valley deserves better than this toxic industry. We deserve something sustainable and something that won't pollute our air and water more than it already is and something that won't turn into a bust after a few decades. We are standing in solidarity together and advocating for a better future for our region and our planet.

Send an email to and express your personal concerns pertaining to the cracker plant directly to the company or click here to be directed to the company contact page.

The following non-profit organizations are partnering with CORR to carry out the mission:

FreshWater Accountability Project (based in Ohio)

Buckeye Environmental Network (based in Ohio)

Ohio Valley Environmental Coalition (based in WV)



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