Monday, May 14, 2012

West Virginia May Get a Cracker Plant After All

As everyone who has a television, a radio, or a newspaper subscription likely knows, West Virginia was recently disappointed by Shell's decision to locate its multi-billion dollar cracker plant not in West Virginia, but just across the border in Pennsylvania.  The dreams of many State officials and workers of a revitalization of the State's chemical manufacturing industry were crushed by Shell's announcement that it would not locate its facility here. While it is still recovering from the sting of being left at the altar by Shell, West Virginia may land a cracker after all, and it may locate right here in the Kanawha Valley.

The Charleston Gazette has reported that Aither Chemicals, a South Charleston, West Virginia company, has plans to build a $300 million ethane cracker on a site currently owned by Bayer CropScience in Institute, West Virginia.  The cracker plant is expected to employ 200 people and gross $500 million in annual sales.  The Gazette reports that the cracker would be built in stages.  Full production would not commence until 2014.  It would utilize a new, proprietary cracking process instead of traditional steam cracking.  This should make environmentalists happy, as it is expected to use 80% less energy and produce 60% less carbon dioxide.  The company was recently informed that it is a finalist in the Shale Gas Innovation Contest that seeks to honor new, innovative, and emerging technologies in the natural gas industry. 

The Gazette has reported that Aither actually prepared a press release announcing the investment and distributed it to State officials in March, but didn't go ahead with the announcement due to a need to work out some details with its partners.  One of those partners is rumored to be Mark West Energy Partners, a growing company engaged in gathering, transporting, storing, fractionation, and marketing of Natural Gas Liquids (NGLs), among other activities.  Mark West would supply the ethane to be used in the cracker. 

This author can't help but to wonder whether one of the "partners" with whom details must be worked out is the State of West Virginia.  The West Virginia legislature recently passed a bill to give rather lucrative tax incentives to any company that would commit at least a $2 billion investment in a cracker plant in West Virginia.  That bill obviously targeted Shell.  Although Aither's investment will fall far short of the $2 billion dollar investment required by the cracker investment bill, Aither will ask for a similar tax deal from the State.  The view from here is that, if such negotiations are taking place, the State should compromise where it can in order to secure this large investment in "green chemistry" that would potentially employ hundreds of West Virginians and place West Virginia at the forefront of innovation in the natural gas industry.

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