Shell could be exploring the sale of its chemical plants, including its recently constructed Beaver County ethane cracker.
The plant, which makes polyethylene, a common plastic, is among those that could be on the auction block, according to a recent report in the Wall Street Journal. The outlet reported the company could be selling off its chemical plants to focus on its core business of producing oil and gas.
Shell declined to comment on a potential sale.
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Shell received $1.65 billion in state tax credits to build the plant, the largest tax break in state history. A small army of 8,000 workers, many from out of state, descended on Beaver County to construct the plant, at a company-reported cost of $14 billion. It began operations in late 2022.
News of the potential sale so soon after the plant was constructed was ”a little bit surprising,” said Jack Manning, a Beaver County commissioner who has been one of the project’s biggest public backers.
Still, Manning says it’s not uncommon for chemical plants to get bought and sold. He worked in the chemical industry for 35 years, and experienced company sales several times.
“When those kinds of things do occur, all the same people stay in place. So it would still be the same people running the show,” he said. “the new buyer’s not going to come in and get rid of everybody who’s running the plant, and try bringing a whole new, whole new team. It just doesn’t happen that way.”
Rob Stier, global petrochemicals analyst with SPG Global Commodity Insights, says the timing for Shell makes sense, since now is not the most profitable time to be in the plastics industry. A wave of new plants, especially in Asia, has produced a glut – and low prices.
“Now we’re into that low profitability cycle starting really in the second half of 2022 and it’s in forecast to continue through next year,” Stier said.
He says Shell’s Beaver County Plant could be attractive to companies in Europe and Asia, which make plastic out of naphtha, a crude oil product.
The Beaver County plant uses ethane, a component of natural gas that is much cheaper than naphtha, and common in Pennsylvania’s Marcellus Shale.
“A plant like Shell’s in Pennsylvania would be a very attractive acquisition for an international producer that wants to take advantage of cheap ethane,” Stier said.
Environmental performance
State officials say the plant’s environmental requirements remain the same if it is sold.
The plant was fined $10 million by the Pennsylvania Department of Environmental Protection for air pollution violations in 2023.
In the first few months of startup, the plant had a number of problems, including a sulfuric acid spill, strange odors, and several events that caused the plant to flare excess gases.
Shell recently applied for a Title V Operating Permit with the DEP. The permit is required under the federal Clean Air Act for any facility that is a major source of emissions.
If the DEP accepts the permit, it will issue a draft permit and open the permit up for public comment, including at least one public hearing.
DEP spokeswoman Lauren Camarda said the agency has not received an application for a change of ownership from Shell, but any buyer would have to meet the same environmental requirements as Shell.
Robin Lesko, Pennsylvania organizer with Food and Water Watch, said she hopes that if there is a new owner, they will be more transparent than Shell has been.
“Honestly, whenever there have been some hard-hitting questions, Shell usually declines to comment,” Lesko said. “So whenever there are uncomfortable (questions), we would like (it) to be more spelled out what exactly it’s going to be doing.”
