Antero Resources Corp. said Wednesday it has signed an agreement with Odebrecht Organization to be the anchor ethane supplier for the Brazilian company's planned ethane cracker and associated petrochemical facilities in Wood County, WV.
Under the deal, Antero would provide 30,000 b/d of ethane to the Ascent (Appalachian Shale Cracker Enterprise) complex, which would supply nearly half of the volume required to operate. The agreement remains contingent upon Odebrecht reaching a final investment decision, which would follow a multi-year feasibility study and after it makes a construction decision about a site in Parkersburg in the northwest part of the state.
In November, Odebrecht said had selected West Virginia to be the home of its next cracker due to its position in the Appalachian Basin (see Shale Daily, Nov. 14, 2013). A report released in December by Witt Economics LLC and funded by a unit of Odebrecht suggested that the petrochemical facility could generate up to $864 million in annual economic output by the time it's fully operational in 2022 (see Shale Daily, March 3).
"Today's announcement highlights one of the important benefits of shale gas production and demonstrates Antero's commitment to the growth of downstream manufacturing in the Appalachian region," said CEO Paul Rady. "We are excited to work with our partners at Odebrecht and Braskem to help position Ascent as a catalyst for regional economic development."
Witt's report estimated that the facility could cost up to $3.8 billion to construct in addition to the cost of pipeline infrastructure, ethane storage equipment and rail lines. Cracker facilities have stoked optimism for a petrochemical revolution in Ohio, West Virginia and Pennsylvania, but the region's infrastructure constraints and its distance from the coasts, among other things, have led to the belief that the region faces stiff competition from the Gulf Coast, whose various complexes refine most petrochemical products in the country (see Shale Daily, March 24).
Plans for a similar complex in Pennsylvania continue to face skepticism as Royal Dutch plc has signed three extensions to purchase land for a proposed cracker it first announced in 2011 (see Shale Daily, June 7, 2011; Dec. 26, 2013). Shell also is in the process of scaling back its onshore U.S. ventures.
The ethane Antero supplies to Ascent would be processed and converted into polyethylene, a building block for use in industrial plastics. If constructed, the facility would give operators another option to take ethane off their gas stream.
Pure-play Appalachian operator Antero is targeting an 85% growth in its production this year. Liquids production, which accounted for 7% of volume in 2013, is projected to increase to 16% this year (see Shale Daily, Feb. 27).