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SHADYSIDE, Ohio – With potential local profits flowing to either the Gulf Coast or Canada, the head of the Ohio Oil and Gas Association hopes at least one cracker plant opens in the Marcellus and Utica shale region.
“Currently, it is more of a waste than an asset,” Shawn Bennett, senior vice president of the association, said of ethane, one of the natural gas liquids prevalent in wet shale gas. “We are in need of an ethane cracker in this region to help us gain value. That would help increase demand, which would help us get more drilling going again.”
Next year, officials with Thailand-based PTT Global Chemical and Tokyo’s Marubeni Corp. are scheduled to decide whether they will build a $5 billion ethane cracker complex that would likely include the 130-acre R.E. Burger plant site and some surrounding property, south of Shadyside. FirstEnergy Corp. still owns the coal-fired power plant that it can still use on a reserve basis, but plans to close it entirely May 31, 2016.
Other potential cracker plants in the Marcellus and Utica region include the Odebrecht ASCENT Project possibility for Wood County, W.Va., as well as the Royal Dutch Shell plant that could open in Monaca, Pa. Both Odebrecht and Shell have already applied for air quality permits to allow construction of their plants, but have not indicated a final investment decision.
If constructed, the cracker complex would utilize ethane extracted from the region’s Marcellus and Utica shale formations. The facility would then crack the ethane into ethylene, which is used as a basis for plastics and resins contained in items such as food packaging, textiles and pharmaceuticals.
In the meantime, Bennett said most companies are just blending the product into their natural gas streams in the process known in the industry as “ethane rejection.”
“You don’t want ethane rejection. You want ethane separation so you can sell it,” Bennett said. “The only way we really make money with it now is to send it to Sarnia, Canada.”
Cracker plants in Canada and along the Gulf Coast now receive local ethane via pipelines. Shipping the product such long distances reduces its value to drillers because of transportation costs, as well as the local community that does not receive the economic development a cracker can create.
“Producers can’t wait until these projects come on line to start drilling,” R. Dennis Xander, president of Buckhannon, W.Va.-based Denex Petroleum, said of potential crackers. “It takes time to drill and fracture these wells, and to install major gathering lines to get the gas from the new wells to the new infrastructure.”
In making the ethane cracker announcement last month, Belmont County Commissioner Mark Thomas said it is too “premature” to indicate who would own the potential plant near Shadyside.
The Asian companies may spend about $150 million over the next few years to determine the viability of the project, while county officials emphasized this $150 million would be private money.
According to published reports, PTT Global and Marubeni are now seeking a third firm to help develop the $5 billion Belmont County project, which they hope to open by the year 2020.