Chesapeake: Cracker Still Part of Equation
Rotruck: Pipeline to Texas doesn’t rule out local plant
Wheeling Intelligencer
14 November 2011
By Casey Junkins
WHEELING - Chesapeake Energy's agreement to send 75,000 barrels of
ethane from the local region to Texas each day should not harm the
chances of a cracker facility locating in the region, a Chesapeake
official believes.
Chesapeake announced it would pipe ethane produced from the
Marcellus and Utica shale regions in West Virginia, Ohio and
Pennsylvania for cracking in the Gulf Coast region. Enterprise
Products Partners revealed the agreement with Chesapeake earlier
this month.
The 1,230-mile pipeline would have an initial capacity to send
125,000 barrels per day of ethane to the Gulf each day, with
commercial operations set to begin in early 2014.
Scott Rotruck, Chesapeake's vice president for corporate
development, also serves as a member of Gov. Earl Ray Tomblin's
Manufacturing Task Force, a group charged with helping to bring an
ethane cracker to the state.
Rotruck said despite the pipeline deal, the state continues to
negotiate "with investors in the petrochemical industry to build a
cracker in the production area."
"It is Chesapeake's belief that the extensive quantities of ethane
in this wet gas window mean that pipeline, storage and a local
cracker are all part of the marketplace. As long as there are rigs
in the Marcellus, we will have to find multiple markets for the
vast amounts of ethane coming out of the ground," he said.
"Without a market for the ethane, the industry could be choked in
its formative stages. Now that we have made arrangements for
pipeline outlet, we can produce more ethane and turn our attention
to the development of a local cracker," Rotruck added.
A cracker facility would cost billions to build and could bring up
to 1,000 permanent jobs paying an average of $60,000 per year.
West Virginia officials have been working to attract a cracker for
months now, with Bayer Corp.'s New Martinsville and Institute,
W.Va., sites as possibilities. Royal Dutch Shell is one firm known
to have an interest in building the cracker, as officials there
have announced plans to build a cracker somewhere in the
Appalachian region.
Corky DeMarco, executive director of the West Virginia Oil and
Natural Gas Association, does not believe the pipeline deal hurts
the state's chances of securing a cracker, as he said Chesapeake
needs an outlet for the ethane the company is producing from the
Marcellus area right now.
Ethane is used by chemical companies to formulate ethylene, the
basis of plastic.
"Chesapeake was the first company to really get into the gas here
to the point where they are producing enough now that they have to
do something with that ethane," DeMarco said.
"Hopefully, (the pipeline) announcement will encourage these
companies to hurry up," he added regarding the potential cracker
developers. "When producers like Chesapeake start looking for
alternatives for their ethane, it should behoove the developers to
get moving."
Charlie Burd, executive director of the Independent Oil and Gas
Association of West Virginia, called the pipeline announcement a
"minor setback."
"The companies looking to build this cracker know what they are
doing," Burd said.
Larry Matheney, secretary-treasurer of West Virginia AFL-CIO, has
a different take on the matter, though, as he believes Chesapeake
Energy has no intention of helping the state land a cracker
facility.
"Today, if West Virginia working families - who struggle each day
due to the scarcity of good jobs - were to ask Chesapeake Energy
CEO Aubrey McClendon why he is robbing West Virginia, we suspect
he would answer, 'Because that's where the money is,'" said
Matheney.
"Is this justice for West Virginia working families, or is it
another example of an out-of-state corporation robbing us? ... I
really believe that Chesapeake has every intention of shipping all
of the ethane they can ship out of this state."