A new report found Shell’s petrochemical complex in western Pennsylvania has fallen far short of expectations.
The Beaver County plant was once projected to bring in $1.5 billion a year, but its cost has exceeded more than double its original $6 billion estimate.
Todd Leahy, North America regional director for the Institute for Energy Economics and Financial Analysis, stated that the $14 billion project has yet to generate even $1 billion in profit for the region. He added that oversupply and weak demand for plastics have made the project unprofitable, as chemical revenue for Shell peaked in 2021. Since then, it has declined by 43%.
“This plant that was going to bring all of those benefits to both Beaver County and Allegheny County is just 3% of the overall profits for Shell in its chemical industry,” Leahy pointed out. “Despite putting out 70% of its polyethylene.”
Leahy noted Shell has begun seeking joint venture partners for the Potter Township plant, and the company’s CEO has even conceded Shell is not the “natural owner” of the facility. Shell’s plant makes 1.6 million tons of plastic pellets each year.
Leahy explained the plant was supposed to be the oil and gas industry’s big pivot to make up for falling revenues, but instead it has added to the losses. He believes it will likely never deliver on its promises, pointing to rising costs and a bleak market outlook as key reasons for its struggles.
“The top-line overarching takeaway is this is indicative of what’s happening in the entire petrochemical market,” Leahy contended. “The market itself just isn’t there to support these facilities.”
Leahy emphasized that China’s rapid petrochemical expansion has only added to the industry’s struggles in Pennsylvania. The report showed shifting U.S. trade policies, including added tariffs on China, are creating uncertainty in global trade and driving down profits for polyethylene and similar products.
