Top of agenda in U.S. Northeast: preparing workforce, infrastructure
Preparing a large and skilled workforce, securing regulatory permits, and building suitable infrastructure: these are top of the agenda for the buildout of the petrochemicals industry in the U.S. Northeast, according to four industry leaders.
Below are extracts of our conversations with these leaders: Denise Brinley, Special Assistant to the Secretary – Strategy Industry Initiatives, Pennsylvania Department of Community & Economic Development; Mike Krancer, Senior Counsel, Blank Rome LLP, and formerly Secretary of the Pennsylvania Department of Environmental Protection; Dennis Yablonsky, CEO, Allegheny Conference on Community Development; and Jenn Klein, President, Ohio Chemistry Technology Council.
The full interviews can be found in our latest paper, Northeast US Petrochemical Sector Development.
Could you tell us a little about your role in the emerging petrochemicals industry in the U.S. Northeast?
Brinley: “We saw the strong upside, positive results of that development in the decision by Shell to locate their ethane cracker in Beaver County, Pennsylvania. We consider the energy opportunities in our state of high relevance to our economy, and we are looking for ways to maximize the downstream use of those natural gas and natural gas liquids within the Commonwealth to promote and enhance our own economic opportunities.”
Krancer: “We’re involved in the Shell petrochemical cracker, on the environmental permitting side, defending a litigation against the permit by environmental groups – none of which are local. We have done and do regulatory permitting and litigation work all across Pennsylvania, New Jersey, New York, and other parts of the country.”
Yablonsky: “Our organization is the official business marketing organization for southwestern Pennsylvania: the 10-county Pittsburgh region. We take the lead on working with companies, both within the region that are thinking about expanding, but also out-of-region companies like Shell and its Pennsylvania chemicals manufacturing project… The second element is that we’re part of the Tri-State Initiative that was launched (by the governors of Pennsylvania, Ohio and West Virginia) a year ago. We’re now working jointly in a number of areas to promote this tri-state region broadly as a new destination for petrochemical and plastics opportunities.”
Klein: “We represent chemical manufacturers, distributors, engineering firms and consulting firms that work significantly within the industry. Ohio is the sixth-largest chemistry-producing state in the U.S.; chemicals are the second-largest manufacturing industry in Ohio (after automotive). The industry provides over 43,500 direct jobs, and contributes another 59,000 related jobs. Our industry generates an additional almost 56,000 jobs in plastic and rubber products.”
What are the core issues you are dealing with in relation to the development of the petrochemicals / downstream industry in the region?
Brinley: “One of the primary things we’ll need to find a way to accomplish is getting pipeline infrastructure in the ground, because that allows the product to move to market. At the same time, while we understand that there are national and international markets for product that is here, we are trying to find ways to advance opportunities for what we call off-ramps of that product in Pennsylvania. We’d like to see a supply of natural gas as fuel for businesses and residents. We also like to see natural gas liquids in the southwest part of the state to be a catalyst for state or regional petchem-manufacturing opportunities instead of simply exporting the NGLs to other regions.”
Krancer: “The petrochemicals industry, and I’m talking upstream, midstream, and downstream, the Shell cracker as downstream chemical-type processing plant, deals with, it is unique as it has an opposition – these radical environmental groups, whose sole goal is to destroy the industry. They’re not interested in better permits, or better way to do the business, like you see in healthcare, or you see in hotel business, or the restaurant business or any other business. Their only agenda is to end hydrocarbons extraction and use.”
Yablonsky: “We’re working on infrastructure, which includes transportation, water and sewer, pipeline and distribution of gas to sites, and sites themselves. We’re making sure that the infrastructure is there to support these kinds of projects. A second area that we’re working on is the workforce side, and that includes both the construction workforce as well as the workforce required to operate facilities such as chemical manufacturing plants... Third, we’re working on collaborative research: how do we continue to move the technology forward in a way that advances this kind of manufacturing more effectively and efficiently. Fourth, we’re getting the message out, communicating to people that this region is a competitive place for the chemicals and plastics industry to be located.”
Klein: “Workforce development is always a challenge for our industry, and as we continue to grow and as we see more petrochemical investment in the region, workforce development challenges will only get bigger. We have a strong university system, but one thing we also need to focus on is not just those four-year degrees, the bachelors and the masters and the PhDs, but looking at the skilled trades such as welders, instrument techs, things like that. We as a state need to continue to address those challenges.”
How are you collaborating with other stakeholders to address these ongoing challenges?
Brinley: “Our role at DCED is to work with those communities that will be the beneficiaries of projects like the Shell cracker, and also work with businesses and ancillary manufacturing type of opportunities that come with that. We also work with universities, because there’s a critical R&D component in the future where our natural gas resources could promote advanced manufacturing opportunities for that region. So across the entire spectrum of communities, businesses, and universities, we are collaborating with everyone in that process, and communicating as needed for advancing the larger benefits of the region.”
Krancer: “In my other business, I run a communications and messaging business called Silent Majority Strategies. The energy business is not new in Appalachia for one thing, although the petrochemical business is. I think it’s incumbent upon the sector to communicate in a way that is personal, and is effective, which frankly I don’t think they’re doing right now. I think the other side has better brand on the communications issue, but the message has to be personal and it has to really raise questions about the nature of the opposition, where they’re coming from, what they’re invested in, and what the future would look like if there were no petrochemical plants in Pennsylvania or Ohio.”
Yablonsky: “We built a training program called ShaleNET – one that’s designed for individuals, including those who are unemployed or underemployed, to get training and a certificate and then subsequently be hired in the upstream part of the natural gas industry. ShaleNET has a common curriculum that was designed, in part, by the companies themselves. The curriculum is used at all of the training institutions, which are mainly community colleges, and these training institutions exist in all three of the states. Well over 3,000 people have, to date, been trained and placed in jobs as a result of ShaleNET. The program is now being expanded as part of tri-state cooperation into manufacturing areas.”
Klein: “We work closely with our counterparts in Pennsylvania and West Virginia - the chemistry councils in those states, making sure that we’re communicating and saying, hey what are you guys doing, where can we be helping, where can we be sharing information, but also working with the upstream and midstream side of things. If we’re going to have a petrochemical industry, we clearly need to make sure that we can get the material to where it needs to go, and that’s where the midstream industry comes in.”
What do you think the petrochemical, plastics and chemical-manufacturing industry will look like in the Northeast region five years from now?
Brinley: “I would extend that to a five to ten-year time horizon, because it takes time to get the resources in place to build an entirely new industry around this type of market. We know right now that the primary flow of product is established and is going to a couple of places. Number one: the Gulf Coast. Number two: the Philadelphia region along with the Mariner East Pipeline. And the third is Sarnia in Canada. Those are existing locations where the primary infrastructure is already in place to court the end use of ethane. Now we have the Shell project in place, and that is a significant catalyst for additional growth (in the tri-state area).”
Krancer: “That depends upon whether the politicians and the regulators make the right choices or the wrong choices. If they make the wrong choices, and they’re beholden to these radical green environmentalists, then what we’re going to see is the buildout elsewhere.”
Yablonsky: “Shell will be nearing completion of its cracker at that point. There should be a supply chain built out around it, which as you know, is quite large in this industry to support these kinds of facilities. I think you’re going to see interest from plastics and chemical companies outside of our region, looking at why Shell and potentially PTT made their decisions, and looking at being here as well. I think you’re going see a cluster beginning to evolve five years from now that doesn’t exist today.”
Klein: “We think we’re going to see only growth from that (the Shell cracker). Ohio is the number one plastics producer currently in the US, but we are third in the nation in announced plastics products projects. So that’s a clear downstream user for the shale gas industry and the petrochemical industry.”