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Strategies & Market Trends : Natural Resource Stocks

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To: richardred who wrote (93039)	8/27/2016 6:42:29 PM
From: isopatch	Read Replies (1) of 108559

This caught my eye: <more than 70% of North American polyethylene customers are within a 700-mile radius of Pittsburgh.> This really is the bottom line argument for the massive demand infrastructure build to take advantage of Appalachian shale gas reserves and production. Ethane is the key feed stock to produce ethylene. Local producer told me last week that, despite some foot dragging in the past 2 yrs, there's more than enough LT demand for another - very profitable - ethane cracker to be constructed @ already selected site just south of Parkersburg, WV. The ethylene need only be piped a few hundred yards to an already existing plastics mfg. plant! Currently operating cracker plants are too far away, and have ethane input already available from nearby producers in Tx. La, and the offshore gulf. For that reason, a supply glut of ethane from Marcellus "wet gas" has developed driving current prices very low. OTOH, that situation will create larger profit margins for both Shell (AWA a 2nd plant) than elsewhere for years to come, until the current "ethane transportation spread" eventually closes. Score one for Shell. Iso

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