Petrochemical economics have changed drastically since the industry’s boom time in the mid-2010s. Industry analysts are now predicting a weakened outlook for the petrochemical industry in 2026 as overcapacity and uneven demand drive down profit margins, spelling further trouble for Shell’s beleaguered ethane cracker in Beaver County, Pennsylvania.
In 2025, higher ethane feedstock costs made it even harder for companies to turn a profit making plastics. At the same, prices for petrochemical products, like those produced at Shell’s facility, remain low. Chemical companies are likely to continue mitigating their financial risks by delaying capital investments, resulting in more project delays and cancellations.
When news broke in early 2025 that Shell was exploring the sale of its new Beaver County petrochemical plant, it caught local residents and leaders off guard. After all, the facility, which received record state tax subsidies and took nearly a decade to complete, had only been operating for just over two years. But in reality, the petrochemical industry has been struggling since the second half of 2022. And it’s only getting worse.
Ethane is the primary feedstock that fuels Shell’s ethane cracker plant in Monaca, where it is transformed into polyethylene using extreme heat to “crack” the molecular bonds. The planning and early construction of the Beaver County ethane cracker coincided with the height of the “Shale Boom” of the mid 2010s. At that time, oil and gas companies saw petrochemicals as another way to capitalize on the record amount of natural gas–and natural gas liquids like ethane–being produced in the region.
As Ohio River Valley Institute Research Fellows Kathy Hipple and Anne Keller detail in their latest report, “Desperately Seeking an Exit,” released in December, the Shell plant was already facing headwinds well before it became operational in late 2022.
While Beaver County and Pennsylvania went all in on the Shell plant, steam cracker capacity was growing worldwide, outpacing demand and leading to a global glut of petrochemicals. China added roughly 25 million tons per year of ethylene capacity over the last five years, boosting global cracker capacity by more than 10% during that period. This contributed to ethane cracker closures in China, South Korea, and Japan. (For context, the Monaca facility has a nameplate capacity of 1.5 million tons per year of ethylene in addition to 1.6 million tons per year of polyethylene.)
Elsewhere, global major chemical companies are pausing major projects or shuttering plants. Dow is pausing construction on its Path2Zero cracker in Alberta, Canada and half of Europe’s ethylene production capacity will close by 2030, according to an Oxford Economics report commissioned by INEOS. Exxon Mobil will postpone its plans to build a $10 billion polyethylene plant on the Gulf Coast of Texas.
Ethane prices are closely tied to the value of natural gas. (This is in part because, when natural gas prices rise, it is more economical to leave ethane commingled in the gas stream to be delivered burned as fuel, rather than used as a feedstock for petrochemicals.) In late 2025, natural gas prices rose 80 percent from September to December, putting upward pressure on ethane prices. At the same time, profit margins plummeted for key petrochemical products derived from ethane. Combined with higher ethane prices driving up the feedstock costs to operate, the deteriorating value of these petrochemical products is crushing Shell’s bottom line at its beleaguered ethane cracker in Beaver County.
It turns out that betting big on a volatile, extractive industry like petrochemicals was not the best investment for Beaver County. When Shell abandons Beaver County, what will it leave behind? Considering the county’s poor economic performance of the last couple years, it seems little beyond unfulfilled promises and missed opportunities.