All 97 miles of imported steel pipeline that will be used to construct Shell’s Falcon ethane pipeline project was offloaded at a Philadelphia port last month (10,996 pipes!), and is now loaded on trucks and on the way to the Pittsburgh region (some may have already arrived).
Last June, Shell reps said the Falcon ethane pipeline would get built this year (see Shell Says Falcon Ethane Pipeline to Get Built in 2019). They were right.
Falcon won’t actually flow ethane to the Shell cracker in Monaca until 2020 at the earliest–because the cracker plant itself won’t go online until 2020 at the earliest.
The Falcon pipeline project is interesting for a number of reasons, the chief reason (for us) being: Shell didn’t use eminent domain for a single foot of the 97-mile, two-legged pipeline system. Shell negotiated with every landowner and got them to sign on the dotted line. Judging by the articles we’ve highlighted in the past, Shell paid landowners between $40-$75 per linear foot for a permanent easement (see Landowners Who Negotiate with Shell Ethane Pipeline Get More $).
The Pennsylvania Dept. of Environmental Protection conducted three public hearings on the project last year, and issued a final approval in December (see PA DEP Approves & Permits Shell Falcon Ethane Pipeline).
The one aspect of the pipeline we had not been tracking is where the actual steel pipe will come from. We were a bit surprised to read that it has been imported, recently, and that the pipe is now on its way to western PA from a port in Philly (in eastern PA).
Last month the M/V Clipper Kamoshio arrived at PhilaPort’s Tioga Marine Terminal carrying 10,996 pipes bound for the Shell Falcon Pipeline located in western Pennsylvania. It took 10 days to discharge the 8,804 metric tons of cargo. 23 pipes per truck are sent westbound each day as construction begins on the Falcon Ethane Pipeline System. The two-leg system will begin in southwestern Pennsylvania and proceed down to West Virginia and eastern Ohio. This is a major project for Shell in the U.S., being one of the first of its kind in the company’s history, feeding Shell’s Marcellus and Utica “cracker” (refinery) plant.
“We are pleased that Shell chose Tioga to import pipes for the Falcon Pipeline. It shows the Port of Philadelphia can serve western Pennsylvania’s cargo need”, said Jeff Theobald, PhilaPort Executive Director & CEO. “Tioga being such a robust multi-use facility makes the whole operation work perfectly.”
Shell has taken extra precaution to exceed minimum environmental safety requirements set forth by the Environmental Protection Agency. The pipeline will be monitored 24/7, with shut-off valves installed every 7.5 miles and monitoring devices inside the pipes. If any issues are suspected, Shell’s protocol is to shut off the pipeline immediately. Additionally, Shell has trained local first responders in all emergency protocols. “Worker, resident, and environmental safety is prioritized throughout the entire process”, as explained by Virginia Sanchez, External Relations Advisor for Shell Midstream Partners LLC.
“So often projects that begun on the Port of Philadelphia lead to even more jobs inland”, said Robert Palaima, President of DRS, whose company discharged pipes from the vessel. Robert continues, “In this case 1,000 workers will be hired during the peak of construction”. The pipeline will traverse 3 states, 22 townships, and consist of 97 miles of pipe. It will connect Marcellus and Utica shale deposits to a petrochemical plant that “cracks” or breaks apart ethane molecules to create ethylene and polyethylene as the finished product. The pipeline is expected to be completed in Spring 2020. (1)
We tried to track down where the steel came from. We couldn’t track down which country shipped the steel pipe, but we did locate the following article from last July talking about Shell’s request to the Trump Administration for an exemption from imported steel tariffs. Shell claimed there is no American manufacturer that makes the kind of stainless steel pipes they need for the Falcon pipeline.
Shell Pipeline Co. has petitioned the federal government for an exemption to President Donald Trump’s tariffs on imported steel.
Spokeswoman Virginia Sanchez said Tuesday that the company has asked to be exempted from the 25 percent tariff on imported steel that was implemented by Trump in June.
Specifically, the company asked for an exemption on 11,200 tons of steel that will be used to construct the Falcon pipeline, which will feed up to 107,000 barrels of ethane per day to Shell’s $6 billion cracker plant in Potter Township.
The 97-mile pipeline will consist of two legs: one running from Ohio and West Virginia into western Beaver County, and another from Washington and Allegheny counties into southern Beaver County.
Construction on the pipeline is tentatively slated to start next year, and it could be operational by 2020.
Sanchez said Tuesday that Shell applied for the exemption in May, and company officials expect a decision to be rendered by the U.S. Department of Commerce by mid-August.
The Department of Commerce late last month issued its first decisions on steel tariff exemptions. According to Argus Media, which is a consulting and market analysis firm for the energy industry, the department last week approved a previous exemption filed by Shell.
According to Argus, the Department of Commerce agreed to grant an exemption on 243 metric tons of steel that Shell will use for drilling wells in the Gulf of Mexico. Argus reported the waiver exemption will only last for one year.
As is common in arguments supporting steel tariff exemptions, Shell said the steel it needs for those wells is not manufactured in the United States and the company is forced to rely on imports, according to Argus.
The same argument was made by Allegheny Technologies, which in March asked for exemptions on imported steel.
Late last year, ATI partnered with Chinese company Tsingshan Stainless. Under the partnership, the companies will import stainless-steel slabs from Indonesia and process them at plants in Midland and in Brackenridge, Allegheny County.
In asking for the exemption, the company said no domestic companies can supply the stainless steel it needs, meaning ATI is forced to rely on imports for its business.
Company officials later said the 100 jobs created at the Midland plant as a result of the joint venture would be “at risk” if the steel exemptions aren’t approved, because the plant would likely have to be closed.
An ATI spokesman couldn’t be reached for comment Wednesday on when the company expects a decision to be rendered by the Department of Commerce. (2)
We expect construction activity will begin any time now. Keep an eye out!
(1) Port of Philadelphia (Mar 22, 2019) – Port of Philadelphia Supports Strategic Pipeline Development
(2) Beaver (PA) Beaver County Times (Jul 18, 2018) – Shell Pipeline asks for exemption on Trump’s steel tariffs for Falcon project
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