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It All Starts with the Wellhead

    June 2018 / Vol. 8 Issue 4

It All Starts with the Wellhead
By: Greg Kozera, Director of Marketing, Shale Crescent USA

Imagine an exposition with over 65,000 attendees, over 2000 exhibitors from over 100 countries in three huge exhibit halls multiple football fields wide and long that goes on for five days. What you have is the National Plastics Exposition (NPE) 2018, The Plastics Show. This show covers every aspect of the plastics industry from manufacturing the resins to producing the products we all use every day. This show is so big it only happens once every 3 years.

This year it was held May 7-11th in Orlando, Florida. We had a great Team led by the Polymer Alliance Zone who had the booth, supported by Shale Crescent USA, the West Virginia Development Office and several regional economic development leaders. Our common goal was to bring industry and jobs to the Ohio Valley. (that use our energy) Increased demand close to the wellhead is one of the best remedies producers have to current gas prices.

Plastics are made from petrochemicals that come from oil, natural gas and natural gas liquids (NGLs). These come from wells that almost ALL require hydraulic fracturing whether they are located in Pennsylvania, Ohio, West Virginia, Saudi Arabia or Russia. The petrochemicals are turned into resins at crackers in places like the Gulf Coast, eastern Canada, locations overseas and soon at the Shell cracker under construction in Monaca, PA outside of Pittsburgh. Because the Shale Crescent USA Region is now producing over 30% of the USA’s natural gas and a large part of the USA’s NGLs, we are an ideal place for additional crackers and other petrochemical plants.

These resins are turned into the products we use every day by various processes using high tech automated equipment. In Orlando, FL we saw the equipment in operation turning various resins into the products we use every day. One person can easily operate these large high tech computerized pieces of equipment but they need technical skills. It also takes a skilled workforce to maintain and repair this equipment. We saw everything from car fenders and engine parts to cups, trash cans, medical equipment, building materials and even films and coatings that keep our food fresh all being made right in front of our eyes.

NPE reminded me just how much of what we use every day comes from plastics and petrochemicals. Try going an hour without touching something from the plastics industry. I can’t do it. Most of the companies (called converters) that do this work are in Ohio, West Virginia, Indiana, Michigan, Pennsylvania and Virginia. Ohio has more people employed in the plastics industry than any other state. Over 70% of US polyethylene demand is in or within a day’s drive of the Shale Crescent USA Region. The converters, companies that turn polyethylene and polypropylene into products, are here because this is where over 50% of the US and Canadian population is that buy their products.

The technology and engineering used to manufacture something as simple as the bottle cap to a plastic bottle, the packaging for our food, the grill to a car, modern medical equipment or even to make a solar panel will amaze you. The dirty little secret that the anti-fossil crowd never talks about is that you can’t have modern wind and solar energy without petrochemicals which come from oil, natural gas and natural gas liquids. Of course, all of those come from wells that require hydraulic fracturing. People like their modern conveniences like cell phones, TVs, cars, clothing, shoes, medicines, toys, etc. However, most people have no idea that they couldn’t exist without oil and natural gas wells that require hydraulic fracturing. If you know a diabetic, someone allergic to bee stings or has asthma, they would die very quickly without plastics. The pens they use to inject themselves and the asthma inhaler are all made out of plastic. We don’t talk about this enough. The antis avoid it like the plague.

Our goal in Orlando was to bring industry and jobs back to our Region. This starts with creating awareness. People need to know that this is a great place to bring a business and raise a family. Keith Burdette, President of the Polymer Alliance Zone based in Parkersburg, has been to many NPEs. He said, “We have had more leads from this week’s Expo than any other. People are looking for us and coming to our booth.”

Shale Crescent was able to meet face to face and follow up with three companies we had discussions with at the World Petrochemical Conference (WPC) in March. They all had key decision makers in attendance at NPE. We have been in contact with all three by phone and email since WPC. It is always better when we can talk in person and NPE helped us to do that. Our discussions centered on the IHSShale Crescent USA Study. They now understand and believe that our region has a huge advantage in natural gas and natural gas liquids (NGLs) cost and availability. These are their feed stocks. They know that we are close to most of the converters. These are their customers. We discussed their needs for things like additional rail infrastructure, NGL storage and work force development. That is why we need students in our community and technical colleges and in the apprenticeship, programs the skilled trades offer.

The focus of Shale Crescent USA is on the top 100 energy users in the world. Approximately a third of these companies were represented at NPE and we made a point to contact all of them. Many have such a large presence in the Gulf that they won’t come here. Our Region is actually a threat because our success could impact the natural gas and NGLs they get from the Shale Crescent USA Region. Others are prospects. We wanted to make sure that we are on their radar screen when they choose to expand. The Polymer Alliance Zone and West Virginia Development Office have a much broader focus. We complement each other.

Shell was well represented at NPE. Their exhibit space was close to us. They had a well laid out 2 story booth that was about the size of my house. It contained a large detailed model of their planned ethane cracker at Monaca, PA. Two Shell people were assigned to the cracker model just to explain and answer questions. Construction is underway. We were told that there are already 2,000 construction workers on site.

Without oil and natural gas wells the three huge exhibit halls in Orlando would be empty. Plastics start at a wellhead somewhere. We are fortunate that today, because of reservoirs like the Marcellus and Utica, most of those wellheads are in the USA. Our country is the Saudi Arabia of natural gas liquids (NGLs), which happen to be the best and most economic feedstock to use. Much of the world still uses naphtha from crude oil which now sells for about $70 a barrel for feedstock which costs over $1.10 per gallon. The USA uses ethane with a cost of $0.25 on the Gulf Coast and $0.10 here in the Shale Crescent USA. That is why companies from Asia and Europe are looking here.

This does not mean that all of the exhibitors at NPE understand the importance of oil and gas to their business. Some have no idea that their business would not exist without oil and gas wells and hydraulic fracturing. We were standing at the Shell cracker model when two gentlemen from California approached. One scornfully commented, “Oh, that’s that fracking area.” They walked away quickly, still totally clueless.

It was a good week in Orlando at NPE. We have a strong Team and are working together. We are still in a marathon and are putting miles behind us. We are seeing wins with local firms including converters expanding and hiring. We have companies looking hard at our Region for expansion. I learned that one West Virginia firm has hired over 30 engineers in just the past year. These are young people who will stay here and raise their families here. Industry returning to the Shale Crescent USA Region means increased demand for natural gas closer to the wellhead. We need to educate the public on how essential petrochemicals are to modern life. We couldn’t support 7.5 billion people on this planet without them. We all need to continue to keep a positive attitude, believe and prepare. Thoughts to ponder.

 

Greg Kozera is the Director of Marketing for Shale Crescent USA www.shalecrescentusa.com . He has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles.

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