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Second shot at cracker is coming

March 19, 2012
By CASEY JUNKINS - Special to the Herald-Star , The Herald-Star

WHEELING - Though Royal Dutch Shell signed a deal to take its ethane cracker to Pennsylvania, a West Virginia-based company still is looking to help create thousands of jobs by building a similar plant in the next few years.

And though Shell plans to take its plant to Monaca, Pa., the head of the West Virginia Manufacturers Association sees the establishment of this cracker as a "victory for the entire Appalachian Basin" because of the related development projects it should generate.

"Shell's announcement proves that projects like this are viable here," said Leonard Dolhert, chief executive officer of South Charleston, W.Va.-based Aither Chemicals. "We are in the game."

Dolhert's company plans to locate a slightly smaller version of Shell's cracker somewhere in the Mountain State, Ohio or Pennsylvania within the next four years.

Company information states Aither is a petrochemical firm whose technology will use a patent-pending catalytic cracking method to transform the ethane into ethylene, which is the basis for plastic production.

"There is local, national and international demand for these products," he said. We are going to take the ethane to turn it into ethylene. Then, our company, or a different company, would turn that ethylene into other products."

Dolhert said the technology will allow his plant to operate at a lower cost than one like Shell's, while using 80 percent less energy and producing 90 percent less carbon dioxide. He said a mixture of banks and private investors are coming together to finance his project, but noted that he cannot yet commit to a timetable for when this will happen.

"Because of our technology, our project is adjustable," Dolhert said, noting he is not sure of the exact scale of his project in terms of how much land it would cover. "We are looking at specific sites in West Virginia, Ohio and Pennsylvania, but cannot be more specific yet."

Dan Carlson, general manager of new business development for Shell Chemicals, the subsidiary responsible for the ethane cracker, said last year the facility would consume 60,000-80,000 barrels per day.

Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said he believes the Utica and Marcellus shale formations should, at peak levels, produce as many as 400,000 barrels of ethane each and every day. Joe Eddy, chairman of the West Virginia Manufacturers Association, sees a number more like 250,000 barrels per day.

Both DeMarco and Eddy believe either of these numbers should be high enough to give the Mountain State another shot at landing a cracker because there should still be plenty of ethane in the region, even after Shell cracks its share.

It is "time to highlight our new downstream expansion opportunities associated with this cracker and for West Virginia to continue to work at landing cracker No. 2 and No. 3," said Eddy. "Even after pipeline commitments, this leaves ample supply for additional cracker expansion as West Virginia continues to develop its Marcellus and Utica natural gas resources."

For his part, DeMarco also holds out hope for another large petrochemical plant because there is a cost involved with moving the ethane to other areas for cracking.

"I do hold out hope because we certainly have the potential for more crackers. The ethane has to go somewhere," he said.

Mike McCown, vice president northeast of Gastar Exploration, recently said as much as 17 percent of the production from his company's Marshall County wells consists of ethane.

McCown said Gastar now sends all of its gas to the Caiman Energy processing plant near Cameron. Companies like Caiman, MarkWest Liberty and Dominion Resources strip the ethane and other liquids away from the dry methane part of the natural gas stream so that all the products can be sold individually. After the ethane is separated from the other substances, it must be shipped to a cracker or placed into a pipeline.

Caiman, Chesapeake Energy and Range Resources plan to send some local ethane to Texas or Canada in these pipelines, as Eddy referenced. This is at least partially because there is no cracker in the Marcellus and Utica region now.

Despite the news of Shell's ethane plant not coming to West Virginia or Ohio, officials remain optimistic for how the cracker could revitalize the manufacturing sector of throughout the region.

"This announcement only reinforces our belief that this region and its various industries will play a key role in the responsible development of the Marcellus shale resource and the future Utica shale opportunity," said Bayer Corp. spokesman Bryan Iams regarding Shell's Pennsylvania cracker.

Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, noted the state may be able to attract several smaller plants that could work with the materials produced from the cracker.

"If one facility takes up 300 acres, and something happens to it, it is gone. But if you have some smaller plants, even if one leaves, the others may be able to succeed," he said.

Ohio Gov. John Kasich hopes Shell follows through with the Pennsylvania building plans because the Buckeye State should be able to gain additional downstream development from it.

"A lot of those plants will make plastics, and our 100-year leadership in plastics will give Ohio an enormous edge in competing for those facilities and jobs," he said.

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