News

TIME TO BURY THE BUILD-OUT

By John Detwiler

Plans for a Shell ethane “cracker” plant, now under construction in Monaca, were first unveiled nearly a decade ago. And almost as soon as Shell’s decision was made, the drumbeat began for a “petrochemical buildout” in the Ohio River Valley. This was the grandiose notion that – with help from public funds and friendly governmental actions – the Shell plant could be the kickoff for construction of an industrial mega-center, designed to turn fracked natural gas into manufactured goods made from plastic. The time has come, however, to decisively lay the vision of “petrochemical buildout” on the discard pile and move on.

For several years, the buildout concept has been pushed forward by a public relations bandwagon, comprised of industry associations, lobbyists, and elected officials, with support from union leadership in the construction trades (plus a few “frackademicians” for intellectual credibility). Together, they’ve cast an aura of inevitability over the idea of “four more crackers.”

On the other side, community advocates have struggled to offset the promise of “economic benefits” with warnings of “environmental damage.” Alluding to the Gulf Coast nickname “Cancer Alley” (where Shell and other polluters occupy the riverbanks), they’ve coined the name “Cancer Valley” for the likely result of a similar buildout along the Ohio.

This rhetorical framing of “economics” versus “environment” has never matched up with reality, but the advocates of heavy industry have managed to embed it in the public consciousness. And the mainstream media never fail to reinforce it in covering any public discussion of the subject.

More recently though, word is finally getting around that the economics of petrochemical plastic manufacturing – like the economics of fracking itself – are no more sustainable than its environmental consequences. The so-called “business case” for a petrochemical buildout has already collapsed, and legitimate investors have walked away. The only remaining signs of life are infused by die-hard “public-private partnerships” such as JobsOhio and TeamPA, whose own business models rest on promoting such big-dollar schemes.

Of the potential cracker projects that were on the drawing boards (when the buildout was first given voice by Team PA), all but one have been formally cancelled, and the remaining prospect has been postponed multiple times. A ballyhooed, multi-billion- dollar investment in West Virginia by the Chinese government has not materialized either; even its cheerleaders in the state legislature are starting to question China’s intentions.

For some time, market analysts have warned that prospects for investing in fossil fuels and fossil-fuel-based plastic are dubious. Such “insider” articles are now spilling over into the mainstream news. And a recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) brings the argument home. IEEFA casts doubt on the success of the Monaca plant even on its own terms, not to speak of an entire industrial center built on Shell’s shoulders.

The IEEFA report lists six major risks to Shell’s success, and notes that they are not only additive but synergistic. It predicts “a long period of financial distress” for the plant before – if ever – it begins to pay back the investment that Shell – and Pennsylvania taxpayers – have put into it. Those risks include: a drop in the selling price of the plant’s sole product (polyethylene plastic); instability in the cost and availability of its only feedstock raw material (ethane from fracking); entrenched competitors, now fighting for survival; and a spreading global concern over pollution from plastic waste.

IEEFA’s analysis has also been brought to the attention of the Governors of Ohio, Pennsylvania, and West Virginia through a letter from experienced administrators and educators (including senior faculty members at Carnegie Mellon and West Virginia Universities, and a former cabinet-level official in state government). In their letter, they call on their Governors to “stop the squandering of public funds” on what they characterize as “a non-starter” of an idea.

When Pennsylvania was competing to “win” Shell’s site selection decision (against similar efforts by Ohio and West Virginia), we heard that the cracker plant was essential to support the profitability of our booming fracking industry. After that, we were told that we needed an infrastructure buildout to support the cracker, and even more crackers to utilize the capacity of the infrastructure. Then, in the “Energize PA” campaign of former House Speaker Turzai and his colleagues, the legislature was asked to subsidize manufacturers of plastic goods, in order to ensure the success of this upcoming petrochemical industry. But that house of cards is shaking.

We Declare Jubilee Demands Poster

As we all feel our way forward to a “new normal,” our small business owners, our communities, and especially our young people are having to reset their expectations. There is no reason for giant corporations to be exempted from that challenge. We live now in the mixture of hope and uncertainty that comes with creating a different future: a perfect time for laying down the bones of obsolete ideas, and for burying the buildout.

John Detwiler is a former Board member of the Thomas Merton Center, and a retired Professional Engineer and business executive.

NewPeople Newspaper VOL. 50 No. 5. July/August, 2020. All rights reserved.

Categories: News

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