More 'cracking' plants in works
With natural gas from the Marcellus shale providing raw materials for the chemical industry, Western Pennsylvania could become home to more processing plants that separate gas into a stream of other value-added products, experts said on Tuesday.
More processing plants are needed to "crack" the growing supply of natural gas into its components -- primarily methane, along with ethane, butane and propane -- said Kristen Holmquist, energy analysis manager for Bentek Energy, a Colorado-based energy research firm.
Ethane, separated from the methane, can be used to make ethylene, which is used in the production of a wide variety of consumer products, from plastic bags to anti-freeze.
"The possibility of a long-term, stable, low-cost supply of natural gas would be a major development for the (chemical) industry, which was finding it almost too expensive to produce in the U.S. just a few years ago," said Heather Rayburg-Smith, a sales manager for Shell Chemicals.
She was chair of Pittsburgh Chemical Day at the Omni William Penn, Downtown, attended yesterday by about 400 industry professionals.
Another gas processing plant likely will be built in the Marcellus shale basin to produce ethane, Holmquist said, declining to speculate whether it might be in Pennsylvania, Ohio or West Virginia.
The first, opened in 2009 -- a joint venture between MarkWest Energy Partners LP of Denver and Houston-based NGP Midstream & Resources LP -- can process 30 million cubic feet of natural gas daily. In addition, MarkWest and Ft. Worth-based Range Resources Corp. opened a 30-million-cubic-feet-per-day processing plant. Both are off Route 519, about 3 miles north of Houston, Washington County.
MarkWest CEO Frank Semple has said the company has spent $800 million on facilities in the region.
"For ethane especially, the only demand, other than burning as a fuel, is for chemicals," Holmquist said.
The challenge in building a natural gas cracking plant is building the infrastructure it needs -- pipelines from gas wells and pipelines to transport the liquids that are separated from the gas, said Kent Moors, an energy expert and director of Duquesne University's Energy Policy Research Group.
Regional leaders have approached five chemical makers about building gas cracking plants in Southwestern Pennsylvania or northern West Virginia, Dennis Yablonsky, CEO of the Allegheny Conference on Community Development, said last week.
A plant with cracking furnaces that turn ethane into ethylene typically costs $1 billion and employs about 250 people, Yablonsky said.
"If we work it right, the next time someone picks up a plastic container, it will say 'Made in Pennsylvania,'" Moors said.
Most of the liquid gas components pulled from the Marcellus shale will go to Canada through a pipeline that takes the ethane processed at MarkWest's processing plant to a Sunoco processing plant in Van Port, Beaver County. It is destined for Nova Chemical Corp.'s chemical plant in Sarnia Valley, Ontario.
Nova believes its plant in Canada is the "most economical destination for natural gas liquids extracted by gas producers in the Marcellus basin," said Randy Woelfel, CEO of Nova Chemicals. The company is committed to being ready for production by the end of 2013.
The liquid components, especially ethane, in Marcellus shale gas will provide Nova Chemicals with the opportunity to increase polyethylene production, Woelfel said.
Another chemical company that is taking advantage of natural gas growth is PPG Industries Inc., Downtown.
"Natural gas is critically important to PPG Industries. We consume a lot of it in our processes and rely on a lot on the products that are downstream from natural gas," spokesman Jeremy Neuhart said.
The company said it will lease property to Marcellus shale drillers at its chemical plant in Natrium, W.Va.