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Aither Chemicals teams with Bayer to market proposed cracker plant in W.Va.

| Friday, June 22, 2012, 5:56 p.m.

The cracker competition in Appalachia is still going, with a potential rival to Royal Dutch Shell plc formalizing a long-awaited deal in West Virginia this week.

Aither Chemicals LLC announced on Thursday that it is formally scouting deals to sell products from its its proposed cracker, an ethane processing plant. Bayer Corp.'s Pittsburgh-based MaterialScience unit owns land near Charleston, the area where Aither plans to build first, and signed on to help Aither assess the market, according to a statement on Aither's website.

Shell's chemical subsidiary has a land deal and may build a similar complex in Beaver County, but dueling projects isn't a bad thing, said Kent Moors, scholar in residence at the Institute for Energy and the Environment at Duquesne University. It makes the region more likely to get at least one of these projects, he said.

“I don't know how serious these guys (at Aither) are, but the more players the better,” Moors added. “For every five projects out there that are announced, we're lucky if we see two of them built. So the more we have announced, the more likely that we're going to have one.”

There are, however, skeptics that any of these projects can succeed in the Appalachian basin. Industry executives have said there's only a market for five to six new plants nationwide. Four are already committed to building on the Gulf Coast, leaving little room for more, said Al Greenwood, deputy news editor at ICIS, which tracks the industry.

Nearly all of the crackers in the country are along the Gulf Coast, which has a network of refineries, pipelines and manufacturing plants that can both feed to and buy from them. There are at least two other projects being considered there, and they'll be in competition with Shell and Aither to get going.

Nova Chemicals Corp. has the room and infrastructure to expand its facilities in Ontario, too, Greenwood said.

“The problem with the northeast is that you have to build from scratch. You don't have the logistics, you don't have the pipelines, you don't have the storage,” Greenwood said in a telephone interview on June 15. “Is there going to be enough ethane for a cracker in the northeast? That's a big question.”

Moors said it's not a risk. Deeper shale drilling beyond the gas-rich Marcellus layer is on the horizon in Appalachia, meaning a growing supply of ethane could help both Aither and Shell make it, he said.

Aither officials have already heard offers from ethane suppliers, they said. They plan to evaluate potential buyers and decide what to do next by Aug. 31, they said. Their cracker could start production by 2015 and the company could open more locations in West Virginia, Ohio or Pennsylvania, Jason Keeling, Aither spokesman, said by telephone.

“We're seeing a rapidly changing, fascinating new market being set up here,” Moors said.

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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