Ethane could be hurdle to Odebrecht PE complex in W Virginia

By Al Greenwood

HOUSTON (ICIS)–Securing long-term supplies of ethane will be the biggest challenge facing Odebrecht in developing an integrated polyethylene (PE) complex in West Virginia that would consume Marcellus shale gas in the northeast US, a consultant said on Thursday.

Odebrecht, Brazil’s major contractor, is considering developing an ethane cracker and three polyethylene (PE) plants in a project called Ascent, short for Appalachian Shale Cracker Enterprise, according to West Virginia’s governor, Earl Ray Tomblin.

Odebrecht will oversee Ascent’s investment and financing as well as the operation of water and electric utilities, Tomblin said. Brazil-based Braskem would be responsible for petrochemical-related activities as well as the marketing the PE.

A purchase order has already been secured for the site of the proposed complex, the governor said.

Although Tomblin did not specify the location, Saudi Arabia-based SABIC had announced plans on Thursday as well to close its acrylonitrile butadiene styrene (ABS) plant in West Virginia, and the company signed an initial purchase agreement for the possible sale of the property.

Tomblin did not disclose a possible timeline or capacity of the Ascent complex. Moreover, the feasibility of the plant is still being considered, he said.

The project’s biggest challenge will likely be securing long-term supplies of feedstock ethane for the cracker, said Peter Fasullo, principal at En*Vantage.

Until recently, Marcellus ethane was considered stranded with limited outlets, Fasullo said.

That is no longer the case, and ethane from the US northeast is heading to Canada, the US Gulf Coast and even Europe.

INEOS plans to import ethane from the US to feed its Grangemouth cracker in the UK as part of a survival plan to keep a petrochemical complex there running.

INEOS has already reached a 15-year agreement to ship ethane from the US east coast to its European crackers. The ethane would be supplied to the export terminals by the Mariner East pipeline.

In eastern Canada, NOVA Chemicals soon will be cracking ethane from the Marcellus Shale at its Corunna cracker.

The cracker’s ethane will come from the Mariner West pipeline, being developed by Sunoco Logistics and MarkWest Liberty Midstream & Resources.

The pipeline will have an initial capacity of 50,000 bbl/day, and it can be expanded as needed.

In addition, Enterprise Products is developing the Appalachia to Texas (ATEX) pipeline, which will take up to 190,000 bbl/day of ethane from the eastern US to the Gulf Coast by the first quarter of 2014.

Also, Williams and Boardwalk are building a natural-gas-liquids (NGL) pipeline from the Marcellus. It will have a capacity of 200,000 bbl/day. 

Shell is still considering plans for a petrochemical complex in Pennsylvania. If built, the complex would use ethane from the Marcellus. Shell is now seeking ethane suppliers for the project.

Now, Odebrecht’s possible ethane cracker could consume even more ethane from the northeast US.

“Are they going to be able to follow through all of this?” Fasullo asked. “Is it going to be a tangible project? There are now a lot of competing outlets for liquids.”

The plants would have other challenges as well. The northeast lacks storage for ethane, and ethylene derivatives in that part of the country will have to compete with those being produced in the Gulf Coast, the petrochemical hub of the US.

Many of the planned new US cracker projects are moving forward and are on track for completion by around 2017, several construction companies told ICIS in July.

At least six will likely be completed in around 2017, according to an executive from Fluor, an engineering and construction company.

The following is a list of the projects and where they stand as far as completion:

Additional reporting by Joseph Chang

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