WHEELING - Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, projects that Pennsylvania, Ohio and West Virginia should be able to produce about 500,000 barrels of ethane daily by 2018 from production in the Marcellus and Utica shale formations.
Demarco and other Mountain State leaders just hope to see at least some of that ethane cracked at the planned Odebrecht Parkersburg project - rather than see it all go out of state to feed plants in Canada, along the Gulf Coast or in Pennsylvania.
The local region finds itself on a solid road in 2014 when it comes to an ethane cracker plant, as Royal Dutch Shell continues to pursue its plant in Monaca, Pa., and Odebrecht is working toward a plant in Wood County.
As West Virginia leaders hope Odebrecht will build a multi-billion dollar ethane cracker near Parkersburg and Axiall Corp. wants to construct a similar facility in Louisiana, Royal Dutch Shell will begin demolishing structures at the Horsehead Corp. site in Monaca, Pa. in taking another step toward building its cracker.
The only bump in the road with a cracker came when Axiall Corp., which now operates the former PPG Industries plant at Natrium, announced late last year it would be pursuing a cracker plant in Louisiana.
Ethane, along with propane, butane, isobutane and pentane, is one of the natural gas liquids often prevalent in "wet" shale gas, along with the "dry" methane. A cracker plant converts ethane into ethylene, which can be used in the manufacture of everything from plastics to tires to antifreeze.
Because there is still no cracker in the Marcellus or Utica regions, processors must do one of three things with the product: blend it into their regular gas streams; burn it off via flaring; or place it into pipelines for shipping to cracker plants in Gulf Coast states, such as Louisiana, or in Canada.
The Odebrecht announcement last year marked good news for the state. West Virginia had been trying to attract a company for a cracker plant for years.
"A cracker in West Virginia just makes sense. The chemical industry historically follows abundant raw materials, and the vast amount of ethane in the Marcellus Shale provides a great foundation for new chemical manufacturing investments," said Kevin DiGregorio, executive director of the West Virginia-based Chemical Alliance Zone, a non-profit organization formed in 1999. It states that it is "dedicated to supporting and expanding the chemical industry and technology economy" in the Mountain State.
"Although situations can change and none of us have a crystal ball, I'm very confident that the cracker in Parkersburg will become a reality," DiGregorio added.
West Virginia Gov. Earl Ray Tomblin's November announcement of the Odebrecht Parkersburg project followed speculation that a company may be looking at property in Marshall County for an ethane cracker.
"Ethane is something that we are going to have to deal with, particularly as we get more wells online," added Gary Evans, chairman and CEO of Houston, Texas-based Magnum Hunter Resources, parent company of driller Triad Hunter, which maintains active operations in Monroe and Tyler counties. "Having a cracker in our own backyard would be great."
Axiall Corp. is planning to build a $3 billion petrochemical complex in Louisiana. Axiall took over the chemical division of PPG Industries last year, giving the company control of the Natrium chemical production site along W.Va. 2, which formerly operated under the PPG badge.
If successful in building its Louisiana cracker, Axiall could make use of the thousands of barrels of Marcellus and Utica shale ethane scheduled to be shipped southward via pipeline projects.
"While we are still considering a number of options and potential partners for the project, and we have not yet received final investment approval from our board of directors, we have narrowed our siting choices to Louisiana," said Axiall President and CEO Paul Carrico. "We are excited about the prospect of expanding our footprint in the state, and continuing to invest in Louisiana and its talented work force."
Axiall already operates complexes in Louisiana two in the Lake Charles, La., area and one in Plaquemine, La. and is evaluating where in the state it would build its ethane cracker. If built, officials believe the new facility would create 250 new direct jobs, about 2,200 indirect jobs, and nearly 3,000 construction jobs in Louisiana.
Royal Dutch Shell
Nearly two years after announcing intentions to bring a multibillion-dollar ethane cracker plant to Monaca, Pa. rather than to Ohio or West Virginia, Royal Dutch Shell is set to demolish structures at the Horsehead Corp. site. Shell once again extended its option to purchase the 300-acre site along the Ohio River north of Pittsburgh, just as it did in December 2012 and again in June.
"We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our world-wide portfolio to add value for shareholders," said Peter Voser, Shell CEO.
For months in 2011 and 2012, officials in Ohio and West Virginia worked to secure Shell's large petrochemical plant because they said it should generate about 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs. Ohio Gov. John Kasich flew to Houston to meet with Shell officials to try to attract the cracker, while Tomblin and West Virginia Secretary of Commerce Keith Burdette also actively worked to entice Shell to build in the Mountain State.
However, Shell eventually decided on the Monaca, Pa. site, leading West Virginia and Ohio officials to blame one another for losing the plant.
As Odebrecht, Royal Dutch Shell and Axiall work to build new multibillion petrochemical plants to run on Marcellus and Utica shale ethane, Nova Chemicals Corp. is already cracking the product into ethylene in Sarnia, Ontario, Canada. This is northeast of Detroit, just across the Canadian border along the Lake Huron shore.
"The introduction of Marcellus Shale ethane into the feedstock diet at our Corunna cracker marks a tremendous milestone in our journey to utilize more cost-competitive feedstock in Ontario, which should result in stronger and more consistent financial performance for our Ontario-based assets," said Nova CEO Randy Woelfel. "This is a critical component to our Nova 2020 growth strategy of capitalizing on new feedstock sources to meet our current needs and expanding customer demands."
Nova refers to the Corunna facility as a "flexi-cracker" because it has the ability to process heavy and light feedstocks, which the company believes gives it a competitive advantage.