PTT Global Chemical puts plans for Ohio petrochemical plant on hold
PTT Global Chemical has put plans for the construction of a massive petrochemical plant in eastern Ohio on hold while it conducts another feasibility study, according to The Columbus Dispatch. The proposed project, which was announced in 2015, has faced a series of delays.
PTT has put the blame for previous delays on the COVID-19 pandemic, the U.S.-China trade war and opposition from environmental groups. The pullout of one of PTT’s two partners on the project, South Korea-based Daelim Chemical USA, has also added to the list of problems. Now the company tells the Bangkok newspaper it must factor in the election of Democrat Joe Biden as president on its revisions.
The company's decision to review the project makes sense, said Kathy Hipple, a financial analyst with the Institute for Energy Economics and Financial Analysis, a Cleveland-based research group.
"There's still a lot of petrochemicals on the market. And demand is uncertain, post pandemic. But the broader (issue) is that the type of plastics that they were going to make -- the price has dropped a lot, since they first conceived of this project," she said.
"It no longer makes economic sense to invest $10 billion in building a petrochemical complex, when the demand for this product is uncertain, the price for the product is very low."
It could be months before the feasibility study is completed.
"I expect it (the study) will be finished in the middle of next year at the soonest," Auttapol Rerkpiboon, the chief executive of PTT, told the Bangkok Post. PTT Global Chemical is a petrochemical arm of PTT.
The company remains committed to the project, and will continue to invest time and resources to it, PTT spokesman Dan Williamson said. He would not put a timeline on when the company will make a final investment decision.
It really comes down to a cumulation of risks, Hipple said.
"You might be able to interact with one risk factor and (the company) might be able to address a second risk factor. But take them all together, and then throw in uncertain regulatory (policy) at the most senior level," she said.
"If you're in the headquarters in Thailand, and you're trying to make ... sense of the crazy politics here. I wouldn't want to commit $10 billion if I were a foreign company at this moment in U.S. history. I would want to take a second look. That just seems like common sense."
The company's air permit for the project expires in June 2021, around the time when the feasibility study may be completed.
"They really have to make some choices, or they'll be going back through that (process) from scratch," said Megan Hunter, a staff attorney for Earthjustice, a non-profit that has represented a coalition of Ohio-based environmental organizations.
"There's a lot of hope for a different economic future, if this doesn't come in. This is yet another signal that there won't be all this effort and money invested into something that doesn't make sense for the valley," she said.
JobsOhio, the state’s economic-development arm, has poured $70 million in loans and grants into the project, including site work. PTT says it has invested about $200 million.
Belmont County is an attractive location for the plant because of its proximity to the plentiful, cheap natural gas of the Marcellus and Utica shale formations in Ohio, Pennsylvania and West Virginia.
Many estimates have pegged the value of the project at $6 billion to $8 billion, making it the largest economic development project in the state.
But every time PTT announces another delay, doubt grows about whether the company will proceed.
The state's economic development arm, JobsOhio, said the company remains committed to the project and is working closely with the company.
"The ethane feedstock at a major cost advantage, access to the Ohio River and the proximity to North American ethylene demand remains in Belmont County, and we consider this project to be very viable," JobsOhio spokesman Matt Englehart said.
"(The company) has expressed its belief in the long-term strategic importance of this transformational project, which would bring billions in investment while creating thousands of construction jobs and hundreds of permanent jobs."
mawilliams@dispatch.com
@BizMarkWilliams
bburger@dispatch.com
@ByBethBurger
Comments