Cambridge Daily Jeff. The Little Tikes Co. gets a lot of the resin it uses to make plastic toys from a Chevron chemical plant on the Gulf Coast of Texas.
Thanks to Hurricane Harvey in late August, Chevron closed its plant until December, and Hudson-based Little Tikes had to find another polypropylene supplier as resin costs jumped 25 percent.
“Everybody in the industry is scrambling, which is just driving prices up,” said Andrew Pierzynski, a Little Tikes sourcing manager.
Little Tikes and other companies that use plastics could avoid hurricane-related disruptions, and reduce their transportation costs, if they could buy resins made in Ohio, Pennsylvania or West Virginia from Marcellus and Utica shale gas.
Utica Summit V, held Wednesday at Walsh University’s Barrette Center, explored how the tri-state Appalachian Basin could become a petrochemical hub. The conference was produced by the Canton Regional Chamber of Commerce, ShaleDirectories.com and The Canton Repository.
Natural gas liquids from the Utica and Marcellus shales are typically transported to the Gulf Coast, turned into chemicals used in plastics and shipped back to manufacturers in Ohio and neighboring states.
“Right now we’re exporting a tremendous amount of value out of the region,” said Paul Boulier, a petrochemicals expert with the regional economic development group Team NEO. “What I’d like to do is try to have this region benefit from that and create wealth and jobs going forward.”
Shell, the global energy giant, has worked toward building an ethane cracker in Monaca, Pa., over the past several years. And PTT Global Chemical, a Thai company, has explored a similar project on the Ohio River in Belmont County.
If built, those multi-billion-dollar plants would be within 400 miles of more than 17,000 companies that make chemicals, rubber and plastics, including 250 with more than 100 workers. The plants also would have access to a network of railroad, highway and river transportation.
The region has the manufacturing infrastructure and know-how to develop a petrochemical hub, but the clock is ticking, warned James Cooper of the American Fuel & Petrochemical Manufacturers, an industry group.
“If we don’t get this done within 10 years, somebody else is going to do it,” Cooper said.
Having a place to store ethane and natural gas liquids, such as propane, will be key to developing a regional petrochemical industry.
Natural gas liquids can be stored in tanks, pipelines or underground. Mountaineer NGL Storage is one of the companies exploring an underground solution.
The company wants to store natural gas liquids in underground salt deposits along the Ohio River near Clarington. Mountaineer plans to pump freshwater thousands of feet below the earth and dissolve the salt, creating voids where it can store hydrocarbons.
A factory across the river from Mountaineer’s site would use some of the brine. The rest would be held in a pond and used to balance the amount of natural gas liquids stored below the surface, like the counterweight on an elevator.
David W. Hooker, a Mountaineer executive, said the company plans to store 3.5 million barrels of natural gas liquids at the site and could increase capacity up to 10 million barrels.
The company has invested $20 million in the $150 million project since 2013, but hasn’t obtained permits all the required permits.
Shorter supply lines
Even when manufacturers don’t have to worry about hurricanes disrupting resin supplies, getting raw materials can be a logistical headache.
Pierzynski, who spoke on a conference panel, said it can take up to three weeks to get resin by train from Texas or Canada, where the company buys polyethylene, another type of plastic.
Having a local source of petrochemicals would hopefully cut supply disruptions and price spikes and allow Little Tikes to respond to large orders on a tight schedule.
“We don’t go back to Walmart and say, ‘I’m sorry, I can’t get you that,’ because they’ll say, ‘Alright, we’re going take the rest of your product off the shelf and put your competitor in,’” Pierzynski said.
By Shane Hoover