Plastics, tech sectors crucial to cracker plants | TribLIVE

The Appalachian Shale Cracker Enterprise project hasn’t broken ground, but project Vice President David Peebles has a quick retort when asked where it stands.

“We’re not standing. We’re moving,” the Houston-based executive with Brazilian consortium Odebrecht said recently during one of his frequent trips to Appalachia.

As is the case with other high-profile proposals to build petrochemical plants close to the shale gas that would feed them, Odebrecht hasn’t made a final decision to build on the spot it picked in West Virginia.

With as many as four ethane crackers in various states of planning above the Marcellus and Utica shales, much attention has focused on whether these plants could get enough of the natural gas liquid needed to produce polyethylene — the building block of many plastic-related products — for 20 years or more. Now the concern centers on building a sustainable market for the plastics that could employ tens of thousands of people close to the multibillion-dollar plants.

“This gives us an opportunity to attract related, value-added commerce that hopefully will last long after the drilling has ended,” West Virginia Secretary of Commerce Keith Burdette said during a recent Natural Gas Utilization Conference in Cecil.

Continued growth of shale gas production answered the supply question as gas producers sign long-term contracts to supply ethane to Odebrecht and to Royal Dutch Shell, which is eyeing a site in Beaver County. New and improved pipelines and processing plants should be online by the time any cracker plant opens three years down the road.

With supply and transportation nearly wrapped up, Odebrecht is looking at what Peebles called the “more dicey” side of the equation: Will the plastics and technology sectors create opportunities to keep the polyethylene in Pennsylvania, Ohio and West Virginia, or will it all get exported to Latin America, Asia and Europe?

“There’s a whole series of products that we need to develop, and these products are not necessarily known today,” Peebles said. “So we need extensions from our universities and from our technology centers … to talk to the automobile manufacturers, to talk to the Procter and Gambles of the world and say, ‘What are the new product substitutions? How do we build demand in this region?’ ”

With its industrial heritage, proximity to gas feedstock and established research universities, adding a few crackers could make Appalachia the Silicon Valley of plastics, Peebles said. Investors will want to see the value chain lining up before they commit, though, he said.

Penn State University has started to answer Peebles’ call, partly through its Institute for Natural Gas Research. Chemists and experts in polymers are increasingly working with traditional gas and shale researchers to help industries, said institute director Monty Alger.

“The chemicals industry is really an energy industry,” he said.

The institute is reaching out to companies “asking what will they need. What are the new classes of materials they will want to make?” Alger said.

Chemical companies want Odebrecht or Royal Dutch Shell plc to commit to building near the big shale plays. Shell is considering a cracker for the former Horsehead Holding Corp. zinc smelter site beside the Ohio River in Beaver County.

“The industry is excited. We’re just waiting to have a final sign-off on the plans,” said Sarah Battisti, president of the Pennsylvania Chemical Industry Council in Harrisburg. “Once we know those are moving along, the chemical industry is going to respond accordingly.”

Shell has started preparing its chosen site, rerouting nearby roads in Center and Potter and applying for an air permit from state regulators. The company has not said when it would make a decision on location. Patrick Henderson, deputy chief of staff and energy executive to Gov. Tom Corbett, said the state hopes to get a final answer early next year.

In Washington County, several companies have looked at the former Wheeling Pittsburgh Steel plant site in Amwell as a possible site for a smaller cracker facility, said county Commissioner Larry Maggi, who declined to name the companies. In Monroe County, Ohio, a startup called Appalachian Resins is considering another smaller facility.

Even if the hoped-for plastics industry builds up around crackers along the Ohio River, the region would export ethane and polyethylene, Peebles said. Producers are moving ethane to Philadelphia for export and to the Gulf Coast where more crackers are coming online.

In an attempt to keep manufacturing here, the state is offering tax credits of 5 cents per gallon of ethane used in the state to produce ethylene if a company invests $1 billion and adds 2,500 full-time jobs.

“We need to do all we can to encourage and incentivize capturing and using that resource right here in the Mid-Atlantic and Appalachia,” Henderson said.

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