Boston, MA 05/08/2014 (wallstreetpr) – The glut of natural gas production in the U.S. has not only led to lower costs for the commodity but also raised interest in ethane cracker projects. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is the latest major oil and gas company to move to take advantage of the favorable ethylene market and production opportunities.
The $256 billion oil and gas giant is considering an ethane cracker facility at a site in western Pennsylvania. The multibillion dollar investment will convert ethane into ethylene and other products. The company said its plans for the cracker complex are already in the third and final stage.
Plant demolition
The site at which Shell is considering building its petrochemical facility is currently being used for zinc production by Horsehead Holding Corp. (NASDAQ:ZINC). As such, Horsehead, recently announced plans to shut down its facility at the site to give way for Shell’s high-dollar cracker plant.
Horsehead announced late last week that it had already halted operations at its Beaver Country smelter that stands about 25 miles to the northwest of Pittsburgh. In that move, the company only left about 40 workers out of the original 510 to help with the final closing of the facility before Royal Dutch Shell plc (ADR) (NYSE:RDS.A) moves to occupy the site.
Shared interest
In investing in multibillion ethane cracker complex, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) seems to share an interest with Williams Companies, Inc. (NYSE:WMB) that also recently announced a second cracker complex at Geismar to be known as Geismar 2.
Williams Companies, a $30 billion energy infrastructure company, announced that it was seeking for partners to undertake the project.
As Williams Companies, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has also not revealed the exact amount of dollars it intends to invest in its ethane cracker facility or even the expected capacity of the cracker complex.
However, what is obvious is that both companies are keen on taking advantage of the cheap natural gas to increase their ethylene production to meet the market demand for the product.
