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PTTG got an extension on their air permit, so now they have until June 21st, 2021 to either enter into a binding contract to build air pollution sources (this would require them to make a Final Investment Decision) or physically start building them on site at Dilles Bottom.

They blamed COVID-19 and other factors as to why they needed an extension. We do not know the 100% absolute truth as to why they have delayed over and over again, however we have many reasons to think it is because of the unstable market conditions and lack of ability to get adequate funding. Read a report describing the risks and shaky outlook of the plant here.

The air permit that PTTG got from Ohio EPA in 2018 expired after 18 months on June 21st, 2020. PTTG initially requested that OEPA automatically extend that permit until February, 2021 because their air permit was under legal appeal (by local residents and groups) for about 8 months, and therefore that delayed their decision-making capacity. OEPA initially extended the permit automatically. It would have been concerning because PTTG could have filed for another 12 month extension in February. This would've given them an additional 8 months before their air permit would've expired again. Five groups—Concerned Ohio River Residents, River Valley Organizing, Buckeye Environmental Network, Ohio Valley Environmental Coalition, and Center for Biological Diversity—represented by the law firm Earthjustice, wrote Ohio EPA warning that Ohio EPA cannot automatically extend PTTG’s permit. We stepped in and cited a U.S. EPA federal law that states this is not legal- that they cannot use the legal appeal of the air permit to get an automatic extension. After receiving our attorney's argument, it appears Ohio EPA required PTTG to officially request a 1 year extension. PTTG did so, and Ohio EPA granted that extension, thereby cutting out 8 months of extra time PTTG would've gotten otherwise.


“The 18-month period to construct exists for a reason. It’s meant to ensure permitting of new sources of pollution accounts for the most up-to-date information on air pollution levels and control technology.” says Megan Hunter, a staff attorney with Earthjustice.


This is a victory. We sought to prevent PTTG and Ohio from using an illegal automatic extension and we won. PTTG could have unlawfully used the free time through February and then sought a formal extension for another year. Now their back is against the wall to work this within a year. We are helping shift the power in our region, a region that has been the O&G industry's playground for too long. PTTG and Ohio EPA now know that groups are not only watching but willing and able to act beyond the initial permit fight. We will keep their feet to the fire. It's important to make companies fight for what they want and to make them explain. We have put PTTG in a defensive position, and we now have more information to work with. We are not victims watching the harmful movements of industry. PTTG's excuses do not take away from our legal arguments should PTTG attempt another extension. Our letter was part of a skirmish and we won. 


PTTG has to follow the law just like everyone else. Concerned Ohio River Residents will continue to follow this situation closely to make sure that corporations are held accountable at every corner. We will continue to protect our home and our future Ohio River Valley from any and all threats like this project.


If you have any questions about this situation, please don't hesitate to reach out!


Here is coverage of this story from the Columbus Dispatch:

Ohio EPA extends air quality permit for proposed chemical plant


Area economists and financial analysts sent a letter to the governors of OH, WV, and PA in early June warning of the reality of investing in the area's future in the petrochemical industry. They cited a recent study published by the Institute for Energy Economics and Financial Analysis and other sources. Read the letter here.


Here is the media coverage of the letter:


WTOV9:

Group doesn't believe petrochemical will -- or should -- be built in Dilles Bottom


WTRF7:

Tri-state economists warn leaders ‘dirty industry’ won’t bring the jobs they’re banking on


Columbus Dispatch:

Cracker plant won’t bring petrochemical jobs boom to Ohio, experts warn


Pittsburgh Business Times:

Report says Shell petrochemical plant faces steep challenges



Changing market conditions and Shell’s financial woes call into question company profits


This study is significant because it lays out the financials risks and instabilities of the Shell ethane cracker plant being constructed in Monaca, PA. The study is applicable to the entire Ohio River Valley area. Please reach out to us with questions.


Here is a link to the study and it is pasted below.


June 4, 2020 (IEEFA U.S.) – The Shell Pennsylvania Petrochemicals Complex being built in Beaver County, PA faces a combination of risks that weaken its anticipated financial performance. Given the critical importance of the complex to the host communities and the state, Shell has an obligation to acknowledge the project’s potential shortfalls. Its public partners, who have opened their doors and provided numerous incentives to bring it to fruition need an explanation, according to a report released today by the Institute for Energy Economics and Financial Analysis (IEEFA). 


“The current economic climate poses additional risks for this investment. When the complex opens, its operating environment will test Shell’s partnership with its public partners. This complex will not be as profitable as originally presented. This was true even before the coronavirus pandemic and has significant implications for jobs, taxes and economic spinoffs,” said Tom Sanzillo, IEEFA’s Director of Finance, “Only increased public disclosure by Shell can ensure that problems are faced squarely and with common sense.” 


Plans for the complex were formally decided upon in 2016. As the project proceeded through the development process, risks emerged that weaken its financial prospects, including:  

  • The price of plastics in 2012-2016 was in the $1 per pound range. Today, plastics prices are in the 40 to 60 cents per pound range. This decline poses risks to Shell’s revenues. 

  • Shell is part of a global effort by large public and private companies to build out production capacity for ethane/ethylene crackers and plastics manufacturing. The buildout has created an oversupply and contributed to lower prices. Industry analysts suggest that the oversupplied market will take several years to adjust, if at all. 

  • Shell is entering the plastics petrochemical market in resin pellet production, an area where it has no market share. The company can expect stiff competition from companies with market share and weak outlooks. ExxonMobil, LyondellBasell, Dow and Chevron as well as its neighbor, NOVA Chemicals, are all in competition. 

  • Even before the coronavirus pandemic, the U.S. and the global economy were expected to grow at a slower rate than would be needed to absorb excess supply in a timely manner. Pre-pandemic, IHSMarkit and ICIS, two leading analysts, suggested that the companies involved with capacity expansions would have to cancel projects or reduce profits.   

  • Over the long term, most plastics investments assume a 3% to 4% annual growth rate in demand.  There is also a risk that a substantial portion of new growth will be absorbed by recycled plastics. McKinsey business consultants have placed the growth rate for virgin plastics, like those produced at the Shell complex, to be only 1% over time. 

“The profitability of the complex is weakened not by a few negative trends, but by a cumulative set of missed revenue and profit targets, as well as an oversupply of plastics, unpredictable costs, lost market share, diminished growth, and increased competition,” said Kathy Hipple, IEEFA financial analyst and report co-author. “These risks are analytically distinct, but taken together, raise significant red flags that the complex will be less profitable than originally presented. ”


Royal Dutch Shell, the Netherlands-based sponsor, has been experiencing a decade-long decline in profitability. Shell’s market capitalization has declined by almost half and its workforce reduced by 18,000. Since 2013, the company wrote off $33 billion. As this report was being completed, Shell cut its dividend, sold Appalachian gas assets and made plans to cut more jobs.  


The report also highlights the problems encountered by Sasol, a South African company that built a similar complex in Lake Charles, Louisiana. Market forces and mismanagement drove up the construction cost forcing expected profits to decline. Recently, a similar project by PTTGC in eastern Ohio, has been put on indefinite hold by the parent company in Thailand. 


The IEEFA analysts noted that relevant third-party reports prepared under the auspices of Shell and a booster organization were withheld. These reports support proponent claims of economic benefits. As presented, the limited information from the full reports is misleading. 

Limited disclosures from Shell leave the public and investors without basic information, such as how much the plant will cost.  


“Boosterism for a project that promises substantial economic benefits is a good sign,” Sanzillo said, “but the information should be credible, available for outside review, and agreed to by the sponsoring company. Unfortunately, these advocacy reports overstated expected profits, understated costs and did not have the full support of Shell.”  

Full report: Shell’s Pennsylvania Petrochemical Complex: Financial Risks and a Weak Outlook


Authors

Tom Sanzillo (tsanzillo@ieefa.org) is IEEFA’s director of finance.

Kathy Hipple (khipple@ieefa.org) is an IEEFA financial analyst.


Media contact

Vivienne Heston (vheston@ieefa.org) +1 (914) 439-8921


About IEEFA

The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.



ABOUT US >

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 info@pttgcamerica.com 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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CONTACT >

T: 740-738-3124

E: ConcernedOhioRiverResidents@yahoo.com