InterviewMultiple companies eying crackers in US Appalachia

13 July 2011 22:31  [Source: ICIS news]

A US ethylene crackerBy Brian Ford

HOUSTON (ICIS)--Shell Chemical recently said it was developing plans for a world-scale cracker in the US Appalachian region, but it is not the only one examining such options, a West Virginia task force member said on Wednesday.

Kevin DiGregorio, a member of West Virginia’s Marcellus to Manufacturing Task Force, noted that while Shell has publicly stated its intentions, a number of other companies that have not made such announcements are nonetheless exploring the possibility of building ethylene production facilities in the region to take advantage of the area’s Marcellus ethane-rich shale gas reserves.

The 12-member task force is working to attract at least one cracker to the state, but there is a good chance of two or more crackers being built in the region, said DiGregorio, executive director of the Charleston-based West Virginia Chemical Alliance Zone.

“West Virginia is a prime location for crackers,” he said, citing the state’s transportation infrastructure and its location within 500 miles (805km) of half the US population and a third of Canada’s population.

The Marcellus shale reserves run through a handful of other states in the Appalachia region, such as Pennsylvania and Ohio, which are also working to attract crackers.

One cracker could create at least 250-500 permanent jobs and thousands of temporary construction jobs, DiGregorio said. He estimated that each $1bn (€710m) cracker investment would result in an additional billion dollar investment in downstream units.

A cracker would process 60,000-80,000 bbl/day of ethane, he said.

Some news reports portray the situation as a race among the states to lure such facilities and the jobs that would come with them, but DiGregorio says he is keeping his attention on what West Virginia can offer.

Among other things, Bayer has said it was looking at two of its West Virginia sites where potential investors could place an ethylene unit. The sites include New Martinsville, with about 1,000 acres (405 ha), and Institute, with about 460 acres.

The Houston Business Journal reported in June that Texas-based propylene producer Petrologistics was considering buying land from Bayer to build an ethane cracker, but Bayer would not confirm it.

DiGregorio said it makes sense to build crackers in the region rather than transport raw material to US Gulf coast crackers, which in turn would ship downstream products back to the eastern US.

“We think West Virginia has the best position for attracting crackers and some downstream manufacturing” DiGregorio said.

Also, “I think there are some states that are more amenable to having chemical manufacturing in their backyard than other states - that gives us an advantage”.

DiGregorio said he expects the task force, which held its first meeting in May, will deliver an interim report before the year’s end.

Among other things, the group is examining the development of underground storage of ethane to ensure crackers a steady supply. The state has hired a company to study ethane storage capabilities, according to news media reports.

($1 = €0.70)

By: Brian Ford
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