Pa. business leaders: Shale-gas pipeline build-out needs to step up

For Braskem America Inc., the choice of where to build a new $500 million polypropylene plant came down to two locations: Marcus Hook or Texas.

The Delaware County site, where the Brazilian company already operates a plant, boasts proximity to the Marcellus and Utica Shale formations, which produce the natural-gas liquids that make a key ingredient in polypropylene. Marcus Hook also is close to Braskem’s customers, who convert the plastic into products ranging from carpet to yogurt cups.

But Braskem decided earlier this year to build the new production unit at its plant in La Porte, Texas. The location near Houston had a critical advantage over Marcus Hook: a ready supply of raw material from a half-dozen nearby Gulf Coast petrochemical operations.

“I was disappointed to choose Texas, but we had to choose the place where we had easy access to feedstocks,” said Mark G. Nikolich, chief executive of Braskem America, based in Center City.

Nikolich’s message at an event Tuesday sponsored by the Greater Philadelphia Chamber of Commerce was that this region has not developed sufficient energy-hub infrastructure, such as pipelines, to attract big downstream investments in the shale economy.

“Decisions are already being made by businesses like ours to move elsewhere because it has not evolved in Pennsylvania fast enough, completely enough, through the entire logistics chain,” Nikolich said during a panel discussion organized by the chamber at the Ritz-Carlton Hotel.

It was a recurring theme at the event: The window of opportunity is shrinking to build capacity here to take advantage of Pennsylvania’s abundant gas production before the capacity is developed elsewhere.

“We do have a competitive advantage,” said Joseph F. McGinn, senior manager of public affairs for Sunoco Logistics Partners LP. “But that can be lost quickly.”

Sunoco Logistics is spending $3 billion to build its Mariner East pipelines to deliver natural-gas liquids such as ethane and propane to Marcus Hook, where most of the material is now loaded on ships for export. Some propane is also sold locally.

Sunoco is exploring development of a propane-dehydrogenation plant at its Marcus Hook facility, which would convert propane into propylene, the material that companies such as Braskem use to manufacture polypropylene. But Sunoco’s timeline is too uncertain for Braskem to commit to doubling the capacity of its Marcus Hook plant, which adjoins the Sunoco site.

“We really have to act now so that businesses like ours see the future, see the ease of doing business,” Nikolich said.

Other industry leaders lamented the slow pace of building infrastructure, which they ascribed to regulatory delays and  public misunderstanding of the importance of natural gas in power production and manufacturing.