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Officials look to needs of cracker plant

February 25, 2014
From Staff Reports , The Intelligencer / Wheeling News-Register

PARKERSBURG - Wood County could experience a major economic boost in the next few years as Brazilian-based Odebrecht Corp. has announced plans to build an ethane cracker plant on the site of the SABIC plant in Washington, W.Va.

West Virginia Commerce Secretary Keith Burdette said he and company officials from Odebrecht have discussed some of the aspects of the proposed project, which, if built, could lead to a road of fortune for state officials, as the multi-billion dollar project would be the largest in West Virginia's history.

Burdette said tax incentives put in place by the state Legislature a few years ago in the hopes of enticing Royal Dutch Shell to locate such a facility in West Virginia are still in place. Although Shell eventually chose a site in Monaca, Pa., the incentives still are in place for Odebrecht.

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Parkersburg Mayor Bob Newell

"The incentives that were worked out will all be a part of the end equations," Burdette said. "They know the incentives are already all in place.

"We have gone through all of the existing tax credits, income tax credits and all of the existing property tax credits. They know what is in place."

According to Burdette, the challenge for West Virginia is to overcome infrastructure issues to assist the company. Officials talked about the need for pipelines to be able to move the natural gas and its related products from point to point.

Fact Box

The Brazilian-based company has announced plans to build an ethane cracker plant in Wood County

Tax incentives that were approved to lure Royal Dutch Shell for its plant that went to Pennsylvania will be used by Odebrecht

The plant's announcement already has led to a surge in economic development activity in Parkersburg, W.Va.

Local officials want to build a cluster of facilities in this part of the country to facilitate development of natural gas pulled from the Marcellus and Utica Shale deposits that would require states such as Ohio, West Virginia and Pennsylvania to work together to develop a number of related businesses and opportunities to benefit the region as a whole

"If they were building in the Gulf Coast, the pipelines and supplies would all be there," Burdette said. "We have to figure out a combination that assists them to offset some of those costs.

"We are not sure how that gets done, but we think that is the next big challenge to overcome."

The proposed complex, which will also include three polyethylene plants and associated infrastructure for water treatment and energy co-generation, is called Ascent, which stands for "Appalachian Shale Cracker Enterprise." A cracker plant converts ethane, a byproduct from Marcellus Shale and Utica Shale natural gas, into the widely used ethylene, a key component for the plastics industry.

If the plant is built, it would be operated by Braskem America. The company, which is based in Philadelphia, also operates a research center in Pittsburgh.

Natural gas is to the chemical industry as flour is to a bakery, Cal Dooley, President/CEO of the American Chemistry Council, said.

"For the first time in 50 years, major chemical producers are looking at making multi-billion dollar investments in West Virginia to capitalize on the Marcellus Shale," Dooley said. "Around 96 percent of all consumer products have chemicals as a part of them.

"A significant number of those are derived from natural gas that has been cracked into various chemicals."

Development of ethane cracker facilities are expected to create a renaissance in manufacturing in the United States, Dooley said. This could represent $7 billion to the West Virginia economy and the creation of 10,000-12,000 jobs.

Officials want to build a cluster of facilities in this part of the country to facilitate development of natural gas pulled from the Marcellus and Utica Shale deposits that would require states such as Ohio, West Virginia and Pennsylvania to work together to develop a number of related businesses and opportunities to benefit the region as a whole.

David Peebles, a business development manager for Odebrecht, said the Marcellus and Utica shales are some of the largest deposits of natural gas in the United States.

"You have the Marcellus and Utica Shale," he said. "We have to figure out ways to build infrastructure and the pipelines that will facilitate the export of that material to the Gulf (of Mexico).

"It is like having a big highway and feeder roads. We have to create feeder roads that allow us to have business develop here."

There is a worry that the gas will just be pulled out of the ground and sent elsewhere to be processed, like what has happened with coal. Already, many companies producing in the Marcellus and Utica regions are shipping ethane to the Gulf Coast or Canada for cracking.

"It is not a matter of shutting any export out," Peebles said. "There is enough supply here with the Marcellus and Utica to not only export but also build here.

"We have to make sure we build here and not just export. That is why it is important to look at both the Utica (primarily under Ohio) and Marcellus (primarily under West Virginia and Pennsylvania). We look at Ohio, Pennsylvania and West Virginia as a cluster of opportunity."

Burdette said it will take time for many aspects of the project to come together.

"This is not a short process," he said. "The state is fully committed to bringing this project to fruition.

"We know we have an equally committed partner in Odebrecht. If there is a way to make it happen, it will happen here in Wood County, West Virginia."

Burdette said it has been a very complicated process in addressing the needs of the project.

"It has been a meticulous challenge to identify the challenges and overcome them," Burdette said. "The last missing piece of the puzzle is how we work on the lack of infrastructure that will be needed.

"We are going to work on that. That is what we are going to be working on and focusing our attention on over the next several months."

Across the Mid-Ohio Valley region, news of the cracker is leading to new business opportunities.

"It has sparked a tremendous amount of activity and interest in our area ... in the commercial and industrial market," said Holmes R. "Butch" Shaver, director of commercial and industrial sales and leasing for Berkshire Hathaway HomeServices Real Estate Center in Parkersburg.

Parkersburg Mayor Bob Newell said the city has received inquiries about available land and building space, largely from realtors seeking information for clients. Because of interest in the Marcellus and Utica shale plays, that was happening even before the cracker plant announcement, but Newell said it has increased since then.

"We've gotten inquiries from realtors outside the area," he said.

"I'd say in the next two or three months ... I think we'll have people taking some of those properties."

One thing realtors have inquired about is what assistance or incentives the city might provide to a business looking at locating within it. Newell said there are multiple possibilities, especially if someone is looking to fill an existing building.

"We rebate back to them the B&O (business and occupation) taxes for renovation over five years," he said. "They'll put more into the renovation than they get back."

In his annual State of the City address, Newell also said more investment is coming to Parkersburg.

"We are talking about new hotels," Newell said. "New medical buildings, new convenience stores and the continuing large expansion of the automobile dealerships are just a few of the developments on the horizon."

And much of those developments were in the works before the cracker plant was announced.

But Newell warned that the window to capitalize on the opportunities that come with that facility and the other growth the area has seen will only be open so long.

"We need to make sure when the drilling is done - and it will be done one day - people still have reasons to live, work and play in Parkersburg," he said.

Those chances have been missed in the past, Newell said, noting the city lacks the amenities of many cities, like a modern retail center, convention and event centers and minor league baseball "and until recently, even a suitable riverfront park."

"We cannot allow history to repeat itself," he said.

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