Rigby Believes ‘Cracker’ Coming

WHEELING – He is not sure just when it will happen, but Don Rigby believes the Upper Ohio Valley will someday attract an ethane cracker petrochemical plant.

“The amount of ethane coming out of these wells will eventually lead someone to build a cracker,” Rigby, executive director of the Wheeling-based Regional Economic Development Partnership, said Tuesday during the Wheeling Economic Outlook Conference.

Speaking to an audience of economists, bankers and other financial professionals at Oglebay Park during the event held by the West Virginia University College of Business and Economics, Rigby said the most significant challenge in gaining the ethane cracker is the lack of available land.

“On a regular basis, there is someone in here looking,” he said.

The liquids-rich Marcellus and Utica shale natural gas in northern West Virginia and eastern Ohio makes the Upper Ohio Valley a prime location for an ethane cracker, according to industry officials. In addition to ethane, other natural gas liquids produced in the wet Marcellus and Utica shale gas include propane, butane and pentane. All of these elements must be stripped away from the dry methane natural gas at processing plants – such as the Blue Racer Natrium facility – so the methane can be sold by utility companies.

Because there is no ethane cracker in the Utica and Marcellus regions, some companies are now shipping the product for cracking at facilities in Canada or along the Gulf Coast.

For months in 2011 and early 2012, officials in Ohio and West Virginia worked to secure a large petrochemical plant – planned by global oil giant Royal Dutch Shell – because they said it should generate about 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs.

Ultimately, Shell announced plans last year to construct its cracker at a site in Monaca, Pa., though Shell has yet to acquire the land for this facility from Horsehead Corp.

In addition to the permanent jobs, Rigby has said the cracker project would bring an undetermined number of temporary construction jobs to the area, as well as the related economic activity this would bring. Marshall County property values increased by $577.2 million for the 2013 tax year, largely because of oil and gas drilling, as well as the processing plants built by Dominion Resources, now Blue Racer Midstream, Williams Partners and MarkWest Energy.

John Deskins, director of the West Virginia University Bureau of Business and Economic Research, said the amount of natural gas produced in the state continues to increase, particularly in northern West Virginia, because of fracking and horizontal drilling from companies such as Chesapeake Energy, Chevron, Gastar Exploration, Magnum Hunter, Consol Energy, Antero Resources, Noble Energy and Stone Energy.

According to the statistics Deskins provided, Mountain State natural gas production has risen by about 40 percent in each of the past few years. He said employment in this industry rose by about 2,300 workers over the past year.

“We do expect a leveling off on natural gas production. But, you never know. We could be back here again next year telling you that it is going to continue to grow,” Deskins said.

Rigby said the Marcellus and Utica shale rush is expected to continue for several years, noting there will likely be temporary workers in the area to build pipelines and drill wells. He said some of the work will eventually transfer to those living locally.

Rigby also said the lease and royalty payments companies give mineral owners to extract their oil and gas can provide a continuing boost to the economy.

“There have been some generational wealth changes,” he said, adding some families will have steady income for many years.