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Despite significant challenges facing Appalachian natural gas, a Pittsburgh-based investment professional with industry expertise believes that there are some bright spots in the region.
Charlie Schliebs, a founder and managing director of Stone Pier Capital Advisers, spoke to the audience gathered recently at the Pennsylvania Independent Oil and Gas Association’s spring conference.
He touched on the positives and negatives of each sector of the industry – upstream, midstream, and downstream – and delivered encouraging views on the emerging petrochemical industry in the Appalachian region.
“Our predicted economics for the Shell facility (now being constructed in Beaver County) are strong,” Schlieb said. The facility along the Ohio River, which is being built at a cost of between $6 billion and $10 billion, is expected to begin operation in 2022. “So strong that after being fully commissioned Stone Pier believes that there may be an expansion of the facility in the works.”
He also believes that a long-proposed second cracker plant in Belmont County, Ohio, will move forward. PTT Global Chemicals has repeatedly delayed making a final investment decision on the facility, and Daelim, its business partner, backed out of the project last year.
Schliebs said he is “highly confident” the facility will be built, whether it is through PTT finding another financial partner or the entire project being sold to a “supermajor” in the industry. He noted that ExxonMobil Corp. has expressed interest in developing a petrochemical facility in the Appalachian region, and even reportedly scouted several sites.
PTT continues to buy “buffer” properties near the proposed plant site, and has contracted with Bechtel to do the engineering and management for the project. Bechtel is the general contractor for the Shell plant project.
Schliebs said that the increasing focus on climate change and reducing greenhouse gas emissions has made it difficult for many companies to obtain financial for capital. He said that much skepticism surrounding the rise of renewable energy sources remains, and natural gas companies are trying to determine how to position themselves for the future.