West Virginia mulling incentives for the construction of cracker

22 December 2011 17:10  [Source: ICIS news]

HOUSTON (ICIS)--West Virginia officials are discussing incentives to attract investment in an ethane cracker for Marcellus and Utica shale production in the state, an official said on Thursday.

“The excitement is mainly because of the long-term possibilities of ethane from the Marcellus gas,” said West Virginia’s Secretary of Commerce Keith Burdette. “An ethane cracker will make available new long-term supply of ethane, the main building block for 90% of consumer products made in the US.”

To entice an investment in a cracker, Governor Earl Ray Tomblin of West Virginia will present a tax incentive as part of a larger proposal aimed at attracting investments to the legislature in January, Burdette said.

The tax incentive is an expansion of existing credit to offset property taxes, and it would apply to an ethane cracker with a capital expenditure of at least $2bn, he said.

Burdette said West Virginia’s property taxes are lower than Pennsylvania and Ohio, which companies are also considering for the site of an ethane cracker.

“I think the legislature is very supportive of our efforts in this area,” Burdette said.

In addition to the tax incentive, the state is considering methods to help attract railway services for shipping feedstock and product to and from an ethane cracker.

“We recognize that captive rail services can be a problem almost anywhere in the US for the economical shipment of products, including those that might be produced by an ethane cracker,” Burdette said. “West Virginia is prepared to consider all responsible options to assist in insuring competitively priced rail services.”

He said railway businesses may be motivated to provide competitively priced transportation without intervention by the state as well.

According to a study by the American Chemistry Council (ACC) released on 6 December, an ethane cracker constructed in West Virginia could create 12,000 industry jobs.

“The manufacturing is just the beginning to be told,” said ACC president and CEO Cal Dooley. “Shale gas could generate thousands of new jobs in the chemical industry, and its supply chain. It’s one of the most promising developments for new manufacturing jobs in at least a decade.”

West Virginia has a history in the plastics and chemical business, though much of the industry migrated to Texas because of the high cost for feedstocks, such as ethane and ethylene, on the east coast. 

Burdette said the company has been in talks with Shell and an undisclosed company. Shell plans to announce the location for an ethane cracker in the northeast in January.

Saudi Arabia-based SABIC announced recently it would consider investing in a US cracker either with a partner or going at it alone.

By: Sheena Martin
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