Pa. Still Seeking ‘Cracker’

PITTSBURGH – Pennsylvania Lt. Gov. Jim Cawley said his state may lead Ohio and West Virginia in the battle to land Royal Dutch Shell’s ethane cracker, but he knows the game is far from finished.

“At the end of the first quarter, we are up by two touchdowns,” he said Tuesday during the Marcellus Midstream Conference & Exhibition at the David L. Lawrence Convention Center in Pittsburgh. “But we know we still have to work hard to finish the game.”

Cawley noted Shell’s announcement last week that the company has an option to build its multibillion-dollar ethane cracker near Monaca, Pa., along the Ohio River is not a done deal. Shell plans to conduct more engineering design studies, continue to assess the local ethane supply and study the overall viability of such a project at Monaca. This follows months of speculation regarding where the company would build the large petrochemical complex.

Cawley said Shell also would need to consider state and federal environmental requirements, as well as local government issues involving Monaca and Beaver County.

Cawley said Ohio and West Virginia residents will have the opportunity to work at the potential Shell Monaca plant.

“The Marcellus (Shale) is revitalizing our main streets in downtowns,” Cawley added. “We see it as an opportunity to put Pennsylvanians back to work.”

Cawley joined numerous natural gas industry officials for the conference, including Caiman Energy President and Chief Executive Officer Jack Lafield. On Monday, Caiman announced it would sell its Marshall County plants to Williams Partners of Tulsa. Okla., for $2.5 billion.

“We were very fortunate to get into the Marcellus. The state of West Virginia is an awesome place to be,” said Lafield, as he joined Williams Vice President Frank Billings for a meeting with reporters prior to the start of the conference Tuesday morning.

With Williams now set to take over the Caiman processing plant at Fort Beeler – as well as the developing Fort Wetzel processing plant and Moundsville fractionation facility – the commitment to send ethane to Canada for use by the Nova Chemicals company at a cracker located there remains in place.

“Shell’s plans are probably going to come together over the next few years,” said Billings. “But Nova has stepped up to buy this ethane now.”

Lafield and Billings also said they are forming a joint venture to develop infrastructure in the ethane, propane, butane, pentane and oil-rich areas of the Ohio Utica Shale.

“We like to get out in front – to work with the producers,” said Lafield, noting his company now has an office in Canton, Ohio, from which Caiman employees will explore Utica opportunities.

“Over the next 10 years, propane and other liquids are going to need to be dealt with,” Billings said of the substance most often associated with heaters or grills.

Although most officials have focused their efforts on gaining an ethane cracker over the past year, propane is another substance that could lead to the building of a plant. Kristen Holquist, manager of natural gas liquids for Denver-based Bentek Energy, said an abundance of propane could justify construction of a plant that would transform this material into propylene, a product also used by the plastics industry.

“This has not yet been proposed by anyone, but with a lot of propane, it is a possibility,” she said of the concept.

Also Tuesday, Randy Nickerson, chief commercial officer and senior vice president for MarkWest Energy, said the company’s $500 million processing project in eastern Ohio has changed slightly. Original plans called for construction of one part of the complex to be built in Harrison County near Cadiz, with the other portion in Monroe County.

“We thought it would be better to move it slightly to the west, so that puts it in a different county,” Nickerson said, noting the planned Monroe County plant will now be built in Noble County instead.