As West Virginia takes up the issue of Marcellus Shale regulatory reform, officials are also continuing their efforts to attract at least one thermal cracker facility to the state.

Lawmakers on the Joint Commission on Economic Development (JCED) met last Monday to hear a progress report on the effort to have at least one ethane cracker built in the region.

“It’s a complicated issue,” Kevin DiGregorio, executive director of Chemical Alliance Zone Inc., told NGI. “You need to get folks to understand the overall economics. You then need to make sure that the folks who might invest in a cracker and the folks who have the ethane can reach a good decision on their supply.”

DiGregorio, who spoke before the JCED, said conservative estimates he has seen suggest that the Marcellus Shale could produce between 150,000 and 200,000 b/d of ethane. He said a cracker, which would cost between $1 billion and $3 billion to build, could handle between 60,000 and 80,000 b/d.

“We probably conservatively will have enough for two-and-a-half crackers,” DiGregorio said, adding that two sites owned by Bayer AG — in New Martinsville and Institute, WV — would be ideal candidates. “There are pipelines connecting those two [sites], and we feel there’s a good chance at getting a cracker at each spot. But even if we don’t, we think that because of the pipeline network, we’ll be able to attract some downstream facilities to manufacture ethylene products.”

Bayer owns about 1,480 acres in industrial parks in New Martinsville, Institute and South Charleston, WV. New Martinsville is on the Ohio River in Wetzel County, while Institute and South Charleston are in Kanawha County. All of the sites currently house Bayer chemical plants (see NGI, May 9).

Charleston Area Alliance CEO Matthew Ballard, who also addressed the JCED last Monday, told NGI that an ethane cracker capable of handling 60,000 b/d would be a “world-class facility,” and would also take two years to build and create about 2,000 construction jobs. Upon completion the facility could create between 600 and 700 permanent jobs.

“That’s an estimate, and there are a million variables that can play into that, but it’s a pretty sensible estimate,” Ballard said Friday.

The JCED also heard from officials with the state Commerce Department and were told that the state had hired PB Energy Storage Services (PBESS) to perform a study on West Virginia’s ethane storage capacity.

Angel Moore, who serves as deputy secretary and general counsel for the Commerce Department, told NGI that the state was still in the process of awarding the contract to Houston-based PBESS, so the cost of the study was still being determined. She added that it will take about six weeks for PBESS to complete the study.

“There are different ways of using ethane,” DiGregorio said. “One way is to pipe it to the Gulf Coast or elsewhere. That doesn’t largely make any sense because you spend about 20 cents a pound to pipe ethane down there to make polyethylene. But most of the polyethylene users are in the Northeast, so you spend another two to five cents per pound to ship it back up.

“So what really makes sense is to have one or more crackers in this region, where you’re using the ethane here and not shipping it, and making the final products here and not shipping them.”

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.