PITTSBURGH - Following months of anticipation, Royal Dutch Shell earlier this year designated Monaca, Pa. as the site for its proposed multibillion-dollar ethane cracker.
The plant is expected to create tens of thousands of construction jobs and more than 1,000 permanent jobs. State leaders in Pennsylvania, West Virginia and Ohio lobbied the company with land and possible financial incentives to land the facility.
The location in Monaca serves the Northern Panhandle and East Ohio well, as local development officials have been working to identify possible downstream business ventures that would service the plant.
Some have questioned whether Shell will build the plant, but Steve Adelkoff, chief financial officer for Aither Chemicals, said there will be at least one new cracker in the Marcellus/ Utica Shale region, and his company may well be the one to build it. Aither currently is studying a location near Charleston for its proposed plant.
"I can build the same world-class cracker for $600 million that Shell needs $2 billion to build. We will have at least one cracker in this region," he said during last week's Developing Unconventional Gas East Conference and Exhibition in Pittsburgh.
Attracting a new ethane cracker to West Virginia would only be one aspect to bringing a new stream of industries to create thousands of new jobs, according to those in the natural gas and chemical industries. Plants to convert the materials produced at the cracker and businesses that would rely on those materials could help create thousands of high-paying jobs over the next several years, officials believe.
If Aither decides to proceed with the proposed cracker for the Kanawha Valley, production could begin in 2015.
Bradley Olsen, vice president of midstream research for Houston, Texas-based Tudor, Pickering, Holt and Co., said he isn't sold on Shell's plans to build a cracker locally. He noted that companies now are working to rid themselves of ethane and other wet gas products, and said he believes ethane will remain a "waste product" through 2020.
"It is going to be important for producers to get rid of this ethane," he said.
Companies such as Chesapeake Energy, Chevron and Gulfport Energy are known in the industry as "producers" because they sell the gas they pump out of the ground. Because the wet gas requires processing before it goes to market, producers send their product to companies such as Dominion Resources, Williams Partners or MarkWest Energy for processing.
At these plants, the ethane, butane, propane and other natural gas liquids are separated from the "dry" methane gas so that all the products can be individually marketed.
Some local producers now send ethane to Texas or Canada via pipeline, at least partially because there is no cracker in the Marcellus and Utica shale region.
Phone and email messages left with Royal Dutch Shell were not immediately returned.
Jim Cooper, vice president of petrochemicals for the American Fuel and Petrochemical Manufacturers, cautioned those at the conference to realize how massive and complex an ethane cracker is. "These are not something you get at Home Depot to set up in your backyard," he said of the giant chemical plants.
Although the ethane cracker is still in the works, Dominion is putting the finishing touches on its $500 million Natrium processing complex in Marshall County. During the conference, it was Dominion's planned Cove Point Liquefaction Facilities for Exporting Liquefied Natural Gas in Maryland that was on the mind of company Vice President Dan Raikes.
"The opportunity to export natural gas is exciting for our country. If you export natural gas, significant economic benefit for our economy will result," he said.
Noting Dominion believes domestic demand for gas in unlikely to increase much over the next several years - despite efforts to boost U.S. demand - Raikes said Dominion does not believe shipping gas out of the country will cause any problems.
Ed Morse, managing director for commodities research for Citigroup Global Markets Inc., said the Marcellus Shale is creating "phenomenal change."
"Soon, natural gas from the Marcellus will replace home heating oil in some of the Northeast," he said.
Penny Seipel, vice president of the Ohio Oil and Gas Association, said those working in the Buckeye State have "learned from mistakes made in Pennsylvania."
"People in the eastern portion of Ohio have seen more oil and gas development than those in the western and central parts of the state. I think we need a little more education in the west and central," she said.