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Frackin’ & Crackin’

By March 23, 2012Newsletters

It is no secret that exploration and drilling for natural gas in the Marcellus Shale region is bringing life back to the region of Western PA, Eastern Ohio and Northern West Virginia. You may have missed the recent big news that Shell Oil has chosen a site in Western PA, Monaca, to be the site of their multi-billion dollar ethane cracking refinery. These “crackers” break down ethane into more commercially useful compounds, such as ethylene, which is used to produce plastics and related products.

Marcellus Shale drilling combined with a local “cracker” will create a structural change to the region, helping to lock in strong economic growth for at least a decade. While certain factors, like taxes and regulation, may negatively impact this growth, we are certain that this boom in natural gas and chemicals in Western PA will create significant jobs and business opportunities.

Lastly, the Shell factory will be located on land adjacent to the Ohio River that currently houses the Horsehead Corporation, a zinc recycling plant, whose predecessor companies, the New Jersey Zinc Company and St. Joe Resources Company, have been in the zinc production business since the mid-1800s. As an interesting historical fact, Pittsburgh had its roots as a manufacturing center because it was located close to a large energy source (coal and timber) and had access to river (and later rail) transportation. The area experienced a significant increase in manufacturing activity when the War of 1812 cut off the supply of manufactured products from Europe. Could local energy, transportation, and supply chain capabilities, once again, provide the same spark to manufacturing in this region and the Midwest as a whole?

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