Industry leaders hope for cracker plants
From the Article by Casey Junkins, Weirton Daily Times, December 2, 2013
WHEELING – Although natural gas processors continue pumping ethane out of the Marcellus and Utica shale regions, the head of an organization representing chemical companies is “very confident” Odebrecht’s planned Parkersburg cracker plant will come to fruition.
“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 nonprofit organization formed in 1999 that states 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 said. (A cracker plant converts ethane into the widely used ethylene, a key component for the plastics industry.)
In the natural gas business, companies such as Chesapeake Energy, Gulfport Energy, Antero Resources, Chevron, Gastar Exploration, XTO Energy and many others drill and frack wells. These are considered the “upstream” companies because they own the gas that comes out of the ground. These upstream companies then ship their gas via pipelines to “midstream” processing plants, such as the MarkWest Energy, Williams Energy or Blue Racer Midstream.
Because there is no “downstream” ethane cracker in the Marcellus or Utica regions, midstreamers must now do one of three things with the ethane they extract: blend it into their regular gas streams, burn it off via flaring or place it into pipelines for shipping to crackers along the Gulf Coast or in Canada.
MarkWest officials recently said they planned to ship up to 400,000 barrels of natural gas liquids – a combination of ethane, propane, butane, pentane and other materials – out of the Marcellus and Utica regions by 2016. However, company spokesman Kevin Hawkins said there is still enough ethane to support the Odebrecht project. ”We believe a cracker in the Northeast would be great option for our producer-customers,” Hawkins said.
Nevertheless, MarkWest also has announced plans to use its “Liberty Ethane Pipeline” to transport ethane from the Majorsville complex. The product then will head to the Gulf Coast via the ATEX pipeline or to Sarnia, Canada via the Mariner West pipeline.
“Eventually, Sunoco’s Mariner East pipeline project will transport purity ethane from our Houston complex in Washington County, Pa., to the Marcus Hook terminal south of Philadelphia for international export,” Hawkins said.
“Ethane is something that we are going to have to deal with, particularly as we get more wells online,” said Gary Evans, chairman and CEO of Houston-based Magnum Hunter Resources, the parent company of local driller Triad Hunter. “Having a cracker in our own backyard would be great.”
Investing $4.5 billion to process methane, ethane, propane, butane and other gases in Marshall County, Williams operates the Fort Beeler processing plant along U.S. Route 250 between Cameron and Moundsville and the fractionator plant south of Moundsville along state Route 2. The company also is building another massive processing facility at Oak Grove in the central part of the county.
Blue Racer owns $1.5 billion worth of processing infrastructure across Appalachia, anchored by the Natrium facility along Route 2 in Marshall County.
“Blue Racer Midstream supports and applauds Gov. Tomblin’s diligent efforts to bring a cracker to West Virginia. In addition to having a very positive impact on the region’s economy, a cracker would benefit all Marcellus and Utica producers who would have an immediate and nearby domestic outlet for their ethane,” Jack Lafield, Blue Racer CEO, said.
“Braskem and Odebrecht were very careful to avoid making announcements or declarations while they were doing extensive planning and due diligence. As an example of their caution and restraint, you will notice they did not announce numbers of jobs or the amount of the investment in Parkersburg,” DiGregorio said. “In my mind, the fact they have finally made an announcement provides significant credibility to their intentions.
As West Virginia officials hope for the Odebrecht cracker, global oil giant Royal Dutch Shell is still considering the option to build a similar facility in Monaca, Pa. Shell has yet to purchase the property in question from Horsehead Corp., but recent published reports indicate Shell continues looking at property surrounding the Horsehead site for possible purchase.
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