Friday, November 15, 2013

Wood County Cracker Plant Announcement a Small but Important Step

Yesterday, Governor Earl Ray Tomblin, alongside officials from the Brazilian-based conglomerate Odebrecht, announced plans for the development of a state of the art petrochemical complex in Wood County. The complex was dubbed Project ASCENT – an acronym for Appalachian Shale Cracker Enterprise. The proposed petrochemical complex would include a much-discussed ethane cracker, along with three polyethylene plants and accompanying infrastructure. Governor Tomblin called the proposed development a “game changer” for West Virginia.

While yesterday’s announcement came with much fanfare, Odebrecht and its subsidiary company, Braskem, have had their eye on West Virginia for some time. In fact, West Virginia Commerce Secretary Keith Burdette announced back in July 2012 that the state signed a non-disclosure agreement with Braskem related to the company’s interest in building an ethane cracker plant in West Virginia. Yesterday’s announcement seems to take this ambition just one step closer to reality.

While the announcement is exciting news for both legislative officials and the business community in West Virginia, the company took a conservative approach in disclosing details of the impact of the project. As discussed previously in this blog here and here, West Virginia officials have been excited and later ultimately disappointed with respect to other potential ethane cracker projects in West Virginia. The 2011 decision by Shell to locate its ethane cracker plant in Pennsylvania, despite the legislature’s hurried passage of a significant business tax incentive designed to lure Shell to West Virginia, was particularly disappointing.

Cracker plants break down complex organic molecules into simpler molecules. In the context of the natural gas industry, an ethane cracker plant, like the one proposed yesterday, creates ethylene, a compound used in plastic manufacturing. The raw material for the plant – ethane – is a byproduct of hydraulic fracturing in the Marcellus and Utica natural gas shale regions. After methane, ethane is the second-largest component of natural gas, roughly 1-6% by volume. In the past, the ethane was simply burnt away with the methane as fuel. Now, however, because of ethane’s value as an important petrochemical feedstock, it is captured during the fracking and refining process.

A plant located in West Virginia to convert this byproduct from the local natural gas industry to a valuable petrochemical has the potential to create countless jobs in the region, continue to spur the growth of the natural gas industry, and provide a needed spark to the sluggish petrochemical industry in the area. While Governor Tomblin and Odebrecht officials were notably hesitant to make any promises about the timeline or eventual economic impact of the proposed complex, it is clear that the public announcement is a major step in making this long-time initiative a reality.

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