The technological breakthroughs that enabled the production of natural gas and associated natural gas liquids (NGLs) from shale formations in the early 2010s also created the opportunity to develop a fully integrated energy and chemical sector in Ohio. Thanks to growing exploration and production in the Utica Shale formation in Eastern Ohio, the State has emerged as one of the leaders in the production and availability of natural gas and NGLs at volumes previously unseen. The enormous economic value chain fueled by cheap and plentiful natural gas and NGLs such as ethane, butane, and propane has provided existing Ohio chemical companies significant competitive advantages and attracted new companies and investments to the State.
JobsOhio has partnered with Cleveland State University to accurately track the actual investment related to upstream, midstream, and downstream investment, finding that from 2011 to 2019, $86.4 billion has been directly invested in Ohio. The breakdown of the $86.4 billion is: $60 billion in upstream (exploration and production), $20.2 billion in midstream (pipelines and gathering systems), and $6.2 billion in downstream (processing and refineries).
One of the principal NGL’s is ethane, which, when “cracked” by heating in a furnace, produces ethylene – a primary building block critical to most manufacturing supply chains. As the gas and NGL production became more prevalent in the early 2010’s, major chemical companies began considering Ohio, Pennsylvania, and West Virginia for major investments in ethane crackers.
PTT Global Chemical Public Company Limited, now known as GC, is one of the many organizations recognizing the state’s unique value proposition and is currently exploring an $8 billion investment to build an ethane cracker at a site in Dilles Bottom, Belmont County, Ohio. GC was recently rated Number One worldwide for sustainability in the 2020 Dow Jones Sustainability Indices (DJSI) chemicals sector for the second consecutive year and was recently ranked among the top 10 companies in the DJSI World Index and the DJSI Emerging Markets Index for the eighth straight year. These rankings reflect GC’s commitment to applying a sustainable approach to driving its business by balancing three dimensions, the economy, the environment, and society, under its principles of good corporate governance.
In 2013, JobsOhio met with a team representing GC, the 47th largest chemical company globally, to discuss the potential for locating its multi-billion dollar ethane cracker facility in Ohio. GC established a US subsidiary, PTT Global Chemical America (PTTGCA), to operate the project and choose the best place.
By April 2015, PTTGCA was established, and a shuttered coal-fired power plant in Belmont County, Ohio, was chosen to be the site for their newest US-based operation. The choice was serendipitous. When the power plant shut down in 2010, its closure decimated the local community as it was the area’s largest employer and the community’s and the Shadyside School District’s biggest taxpayer.
JobsOhio immediately realized that we were faced with a unique combination of a world-class company pursuing a growing industry in a community in desperate need of new economic revitalization, an opportunity to good to pass up. The convergence of ethane availability and a prominent site along the Ohio River would provide the area with the potential of billions in investment, thousands of construction jobs, and hundreds of high-paying, permanent operating jobs.
JobsOhio Gets Cracking
Approximately one-third of the 500-acre site was the former coal-fired power plant, and the remaining two-thirds sat vacant and was previously used as a sand and gravel quarry. JobsOhio’s incentive package for PTTGCA included revitalization grant funds to assist in demolishing the power plant and addressing any environmental contamination on site.
The JobsOhio Board of Directors supported a decision to spend funds ahead of time so that when the project’s final investment decision was made, construction could begin immediately. JobsOhio invested almost $51 million on the power plant demolition, site remediation, site preparation, and site engineering work. By December 2016, the demolition was complete and soil contamination was remediated.
An additional $20 million was advanced in January 2020 to allow for additional site work and grading to be completed while PTTGCA negotiated the project financing. Due to the COVID-19 pandemic and its impact on delaying the final financing negotiations, PTTGCA re-paid JobsOhio that $20 million in January 2021. JobsOhio and PTTGCA have an agreement in place that if the project does not proceed, then the property would be transferred to JobsOhio, which would then market the site for the highest and best economic development use.
PTTGCA now owns the entire nearly 500-acre site and with all permits in place, construction can begin once a forthcoming final investment decision is made.
Potential Largest Project in Ohio History
PTTGCA has already invested $300 million in the project and could invest more than $8 billion in the construction of the plant pending their final decision in 2022. The project would be the single largest economic development project in the history of the State of Ohio. Some 6,000 construction workers would be employed at the peak of the 54-month construction period and over 500 high-paying jobs would result from the project.
The primary product from the Ohio project will be high density polyethylene (HDPE), which is a highly recyclable plastic. This product and its ability to be recycled fits in well with GC’s proven record in sustainability. The HDPE that would be produced by PTTGCA is used in vital medical devices, automotive components, construction materials, and other applications for high strength plastics. The COVID-19 pandemic may have caused a delay in PTTGCA’s project financing negotiations, but it also magnified the role plastics like HDPE play in medical components and devices. These plastics are used to make respirators, personal protective equipment, packaging for syringes and vaccines, and other critical components.
HDPE is commonly recycled, as proven by many HDPE users such as the Hilliard, Ohio based Advanced Drainage Systems (ADS). According to ADS, HDPE is their second largest plastic stream, recycling 550 million pounds of plastics per year, which has allowed them to avoid 730+ million pounds of greenhouse gas emissions annually.
The global petrochemical market is expected to grow by 5% by 2030 to $729 billion from $453 billion, according to Canadian market research organization Precedence Research. Further, a study commissioned by JobsOhio and Shale Crescent USA, conducted by IHSMarkit, shows the advantages of locating an ethane cracker in the Ohio/West Virginia/Pennsylvania region. Nearly 70% of the polyethylene demand is within 700 miles of the region, with significant demand in Ohio. Combining the access to market demand with some of the lowest cost ethane in the world and locating a world-scale ethane cracker in the region will result in a 23% cost advantage over the US Gulf Coast. If PTTGCA makes a final investment decision on the project in 2022, it will likely be operational in 2026 or 2027.
Additionally, the chemical industry has rebounded from the 2020 COVID-19 shut downs. According to Chemical Week on February 15, 2021, the IHS Markit Material Price Index (MPI) advanced 5% in the first four weeks of 2021 and 35% since early November. The MPI is up 44% year-over-year. After an estimated 3.7% contraction in 2020, world real GDP is projected to increase 5.0% in 2021, 4.2% in 2022, and 3.1% in 2023. This growth, however, can be impacted by natural disasters. The US Gulf Coast is home to the majority of ethane crackers and associated petrochemical plants. Over the past five years, multiple hurricanes have hit the Gulf, most recently hurricane Ida in early September 2021. These storms cause plants to shut down and shut downs cause huge supply chain disruptions for the industries served by those plants. Having a petrochemical hub in the Ohio/Pennsylvania/West Virginia region will provide the US with product redundancy, which will protect the US economy during future storms.
A Transformational Opportunity for the Community & State
The additional infusion of capital and jobs by PTTGCA would be transformational for Belmont County, both sides of the Ohio River, and the entire State of Ohio. PTTGCA has signed local property tax abatement agreements that would result in the Shadyside School District being able to construct a new K-12 school campus. That district has not been able to build a school in over 50 years and portions of the existing high school are 100 years old. The PTTGCA project would be a generational change for that area’s children and their families.
According to a recent economic impact study commissioned by JobsOhio, it is estimated that the construction period for the PTTGCA project would result in total economic activity (output) of over $7.2 billion, generating an estimated $102 million in county and sub-county tax revenues by the end of construction, and an additional $132 million in taxes collected at the state level.
Once operational, the PTTGCA project will support more than 3,500 workers across different sectors of the economy. An estimated 54 jobs will be supported for every 10 direct employees at the plant, either indirectly or through household spending. PTTGCA’s plant, with over 500 direct employees, will annually support over 1,800 jobs in supply chain industries (e.g., wholesale, services to buildings, and transportation), while more than 1,160 additional jobs will be supported in population-serving industries through household spending. Labor income is projected to be over $1.2 billion in total over the first five years of operation and, along with employment, constitutes one of the project’s largest multipliers. For every dollar paid directly to PTTGCA employees, $2.91 will be paid to supply chain or service industries workers.
JobsOhio and PTTGCA have invested significant time and personnel resources into this project since July 2013. The Utica Shale production results have provided new opportunities to take advantage of cheap natural gas and NGL’s for the entire state and Belmont County has an ideal site for this ethane cracker investment. This area has been negatively impacted by plant closures and job loss over the past four-plus decades. The project will have a massive positive impact on the area and the economic impact will be transformational. The project will also help other Ohio companies that are consumers of HDPE to source their feedstock from a local plant and eliminate the transportation costs, shipping delays, logistics concerns and hurricane risks associated with sourcing from the Gulf Coast region.
JobsOhio and its Board of Directors have made calculated decisions to support this project, we have enjoyed our partnership with PTTGCA and GC leadership, and we remain committed to seeing this project come to fruition.
JobsOhio is Ohio’s privatized economic development organization established in 2011. JobsOhio’s sole mission is economic development. For JobsOhio to succeed in its mission, we help companies already located in Ohio expand and we also help attract new operations to the state. JobsOhio’s unique funding through the 25-year lease of the state’s liquor franchise allows us to utilize those funds for grants, low interest loans, workforce training, and other related projects costs for expansions or attraction opportunities. We also work closely with state agencies, regional, and local partners to help win projects and improve the state’s economy.
PTT Global Chemical Public Company Limited
PTT Global Chemical Public Company Limited is Thailand’s largest chemical producer and chemical flagship of PTT Group. The company’s business value chain consists of upstream business with petrochemical capacity of 8.2 million tons per year and petroleum products capacity of 228,000 barrels per day. Downstream business includes polymers, EO-Based Performance, Green Chemicals, and HighVolume Specialties. Details are available at www.pttgcgroup.com