The oil and gas company is returning to the polyethylene market, building a 386-acre plant on the site of a long-shuttered zinc smelter on the Ohio River.
The expansive Royal Dutch Shell chemicalprocessing plant under construction on a big bend of the Ohio River in western Pennsylvania is one of the largest and most expensive projects ever to be built along the tributary.
It’s not only the plant’s mammoth scale that has attracted attention. Just as significant is the project’s location: 30 miles northwest of Pittsburgh, on a river that for four decades has been a corridor of Rust Belt industrial ruin.
That era is over, Shell executives say. The sentiment is shared by the region’s tradespeople, business executives and political leaders, who are eager to strengthen the economies of towns along the river.
For the first time in two generations, steel girders and worn tubing are not being dismantled along the banks of the upper Ohio and shipped away. Instead, new parts are being assembled by Bechtel, Shell’s primary contractor, into a world-scale, state-of-the-art chemical processor to convert liquid natural gas into polyethylene, a common plastic.
“We repurposed a previous industrial area, and we created a place with new jobs to take the place of jobs at that old plant,” said Hilary Mercer, Shell’s vice president for Pennsylvania Chemicals, who is supervising the construction. “This was a huge steel area, and steel has largely disappeared. We are bringing a new industry to take its place.”
Shell never discloses the cost of its projects, said Ms. Mercer, who has worked for Shell for 31 years and overseen projects to build liquid natural gas processing plants in 12 other countries. But an economic analysis prepared several years ago for Shell by Robert Morris University and submitted to the state projected that the cost would be $6 billion.
Trey Hamblet, vice president for global research of Industrial Info Resources, a consulting firm in Texas that tracks plant construction around the world, said that price was inaccurate. Based on his firm’s research and interviews, the Shell plant will cost at least $10 billion, he said.
Shell ended its polyethylene production in 2005 in the face of increasing costs and growing competition, but it began evaluating a return in 2012. At the time, the colossal dimensions of the natural gas reserves bound up in shale formations deep beneath the rural upper Ohio River counties in Ohio, Pennsylvania and West Virginia were becoming clearer, and technology was making it easier to tap those reserves.
In 2005, the first wells were drilled in the region. Since then, some 17,000 more gas wells have been drilled and hydraulically fractured under high pressure to release a torrent of “dry” methane for electrical generation and heating and “wet” gas liquids like ethane, pentane and propane.
During the same period, billions of dollars were spent on gas separation plants, pipelines, pumping stations, gas-fired electrical generating stations and shipping terminals. The investments turned the upper Ohio River Valley into the largest natural gas field in the United States. The region produced nine trillion cubic feet of fuel last year, a third of the national production.
The gas supply in the three-state region is enough to last at least half a century at current rates of consumption, according to the Energy Information Administration, the statistics unit of the Department of Energy. The national market demand for polyethylene is projected to increase to 60 million metric tons over the next two decades, up from 40 million metric tons last year.
The company’s decision in June 2016 to build the plant opened the third stage of gas development: the production of ethane and polyethylene.
“One of Shell’s growth aspirations is in chemicals,” Ms. Mercer said. “If you look at chemical companies in the world, one of the largest growing sectors in chemicals is polyethylene. If you want to grow in chemicals, then logically you want to grow in polyethylene.”