Shell Pennsylvania cracker decision is pressing

With capital spending cut $30bn since 2014, the board’s final action comes against the backdrop of lower earnings and cutbacks driven by crude. Pictured here is an inside look at Shell’s complex in Deer Park, Texas. (Source: Shell)  

LONDON (ICIS)–Shell’s cracker project in Pennsylvania is first on the list of investment decisions the company has to make, the energy giant said on Wednesday.

The chemicals project final investment decision (FID) is probably the first of three or four across the group that will need to be made, Shell chief financial officer Simon Henry said following the announcement of the group’s first-quarter financial results.

“We’ve had quite a lot of discussion [on the project],” he added.

Shell’s decision will have to be made against the backdrop of lower group earnings and spending cutbacks driven by lower priced oil. Shell’s capital spending has been cut by $30bn between 2014 and 2016, Henry said. 

“It [the Pennsylvania cracker] is an excellent project,” he added, suggesting that the investment decision might be easier if this were not a $40/bbl oil world.

There are also costs associated with not making the investment decision, he said.

Shell has been spending quite heavily on the project, more recently acquiring land for ethane feedstock pipelines and office space related to it.

The project was announced in June 2011 and Shell selected a former zinc smelter site for the cracker and downstream units in Pennsylvania in March 2012.

The complex would include an ethane cracker with a capacity of 1.5m tonnes/year and three polyethylene (PE) units which would have a combined capacity of 1.6m tonnes/year.

INSET IMAGE: (Source: Shell)