InterviewUS Marcellus Shale cracker decision at least 3 months away

25 July 2011 23:51  [Source: ICIS news]

By Brian Ford

HOUSTON (ICIS)--Petrochemicals producers are at least three months away from deciding on whether and where to build a cracker near the ethane-rich Marcellus Shale reserves in the eastern US, a member of a West Virginia task force said on Monday.

Jack Lafield, president and CEO of West Virginia-based natural gas gathering and processing company Caiman Energy, and a member of the state’s Marcellus to Manufacturing Task Force, said, "Personally if anybody does anything in the next three months I would be surprised."

He added, "The biggest issue is where they will put it."

The Marcellus to Manufacturing Task Force was assembled by West Virginia Governor Earl Ray Tomblin to examine ways to help attract a cracker to the state.

The state sits on the Marcellus Shale reserves in the Appalachian region. Other states such as Ohio and Pennsylvania also are potential candidates for a cracker.

Shell said in June it was developing plans for a world-scale ethylene plant with integrated derivative units in the Appalachian region, but the Anglo-Dutch major said it had not yet decided on an exact location.

Shell could go it alone on any polyethylene (PE) component of its plan for a cracker project in the US, but it would also contemplate teaming up with another company.

Other producers that could build a cracker include Brazil’s Braskem and US-based Westlake.

Braskem CEO Carlos Fadigas said in April that his company was considering a greenfield investment in an ethylene cracker and a polyethylene (PE) plant in the US. A spokesman for Braskem offered no further details.

Westlake spokesman Dave Hansen said Westlake was actively investigating and monitoring the developments in the Marcellus areas as well as other parts of North America where shale is available, but added the company had no announcements at this time.

Caiman’s Lafield said there was a high probability of at least one cracker being built in the region using Marcellus ethane, but cautioned that the ethane supply from the Marcellus shale has its limits.

He estimated the Marcellus shale in West Virginia can produce 175,000-255,000 bbl/day of ethane.

However, a pipeline project to transfer a significant amount of Marcellus ethane to US Gulf coast producers is in the works.

A joint venture project by El Paso Corp and Spectra Energy could begin piping as much as 90,000 bbl/day of ethane from the Marcellus Shale region to the US Gulf coast by the fourth quarter of 2014, El Paso said in a statement. The project relies largely on existing pipelines.

In addition, Canada’s NOVA Chemicals announced on 8 March it had a memorandum of understanding with Caiman to buy up to 20,000/bbl of ethane from a gas processing plant in West Virginia to help feed NOVA’s Corunna cracker at Sarnia, Ontario.

NOVA also announced in May a memorandum of understanding with a subsidiary of Range Resources to secure ethane supplies from the Marcellus Shale.

A new cracker in the Marcellus Shale region could consume at least 60,000-80,000 bbl/day of ethane, according to some estimates.

"Out of that you really have room for one cracker, and that cracker better hurry," Lafield said.

For more on ethylene visit ICIS chemical intelligence

By: Brian Ford
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