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Shell Splurges $14 Billion on a Plant That’s Practically a Comedy of Errors

Posted by John Donovan: 14 Feb 24

In a jaw-dropping display of financial gymnastics, Shell, the beloved titan of environmental stewardship (wink, wink), has officially admitted to dropping a cool $14 billion on their Beaver County ethane cracker plant. That’s right, folks—more than double their initial fairy tale estimate of $6 billion. It seems someone at Shell’s been playing a little too fast and loose with the abacus.

Shell CEO Wael Sawan, possibly while polishing his crystal ball, shared this financial marvel during a recent earnings call. Sawan, who stepped into the CEO spotlight last year, presumably without a magician’s hat, stated, “The fundamental is making sure that the $14 billion so or so of capital employed in Shell Polymers Monaca are generating the return.” Ah, the sweet sound of optimism or delusion? You decide.

As if the plot couldn’t thicken any further, Sawan confessed that the plant, which started its comedic opera of mechanical mishaps from day one, won’t be belting out its full earnings aria until the 2025-26 season. But wait, there’s more! Out of the three polyethylene trains meant to serenade us with plastics, one decided to go off the rails due to “equipment issues,” delaying the grand finale of plastic production.

Fear not, for Sawan assures us, “I’m pleased to report that piece of equipment now has been installed, a compressor that we needed to put into place is in the process of being started up and will ramp up through the course of the coming weeks.” Ah, the suspense is palpable! Can you feel it? It’s like waiting for a delayed train that promises to arrive “soon.”

Shell’s grand vision of turning a tidy $1 billion to $1.5 billion in EBITDA from this polyethylene-producing extravaganza once it’s up and running might sound like music to shareholders’ ears. But given the orchestra of blunders so far, one might wonder if it’s more akin to a cacophony of cash burning.

In a moment of rare introspection—or perhaps after a stern talking-to by their accountants—Shell’s leadership, when prodded about diving into another financial black hole like this project, murmured something about being “very clear where every single dollar of capital is going to be prioritized.” Translation: Maybe, just maybe, we’ll think twice before embarking on another megaproject misadventure.

Nestled along the scenic Ohio River, the petrochemical complex (a term as charming as “toxic waste dump”) was lured into existence with one of the largest tax incentives in Pennsylvania’s history—$1.7 billion of taxpayer generosity. All this for the noble cause of producing up to 1.6 million tons of polyethylene yearly. Because, as we all know, the world was desperately lacking in flexible food packaging, sports equipment, toys, crates, shampoo bottles, and milk cartons.

So, as Shell marches proudly forward with its $14 billion monument to overbudget projects, one can’t help but marvel at the spectacle. It’s a tale of ambition, comedy, and perhaps a dash of hubris, served up with a side of plastic—lots and lots of plastic.

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