Odebrecht Oil & Gas has secured a deal to supply half the volume of ethane needed for its planned petrochemical complex in Parksburg, W.Va.
In a deal announced March 26, Antero Resources Corp. said it has agreed to provide has 30,000 barrels of ethane per day to Odebrecht.
Odebrecht, a Brazilian construction conglomerate, announced plans in November to develop the area for its petrochemical business. Antero is an active driller in the Ohio and West Virginia region's Marcellus and Utica shale gas ranges.
Odebrecht vice president David Peebles said the company will spend about the next year finalizing its plans and tailoring the plant's design to regional end markets before pulling the trigger on developing it.
But Odebrecht already has secured a 300-acre site for the complex in Parkersburg. Peebles expressed confidence the project will move forward and that the region's shale drillers will provide the natural gas products needed to run it.
“We are very much committed to the process, we have bought the land already and this supply agreement is an anchor supply agreement,” Peebles said.
The plant would take ethane — found in abundance in the Utica's wet gas and in some Marcellus gas — from fractionation plants such as those recently built in Ohio towns like Cadiz, Scio and near Leesville Lake. From that, it would produce raw materials for the plastics and specialty chemical industry in the form of ethylene and other products.
Figuring out exactly how to configure the plant, so that it produces the right end-products for markets the plant can reach by rail, will be part of Odebrecht's year-long evaluation process, Peebles said.
The site was chosen because of its proximity to shale gas supplies as well as to end markets like the plastics and chemical industries in northern Ohio and Pennsylvania, along with the rail lines that serve them, Peebles said.
“We want to be close to our markets, so it was a significant consideration,” Peebles said of the site's location.
Most observers had been more closely watching Pennsylvania for such a development, and specifically Beaver, Pa., where Shell Chemical LP is considering building a similar facility. That project has been pegged at $3 billion to $4 billion, but Shell has not fully committed to its development.
The Parkersburg plant should not dissuade Shell from moving forward, according to Peebles, who said he hopes that Shell and possibly others also build crackers in the region.
“We would encourage Shell to invest,” Peebles said. “We think there's abundant supply, and we think there is value in having one, two or three crackers in the region.”
That would help the region to build a cluster for the industry, consisting not only of the crackers but other processors and downstream users that would both make and consume plastics feedstocks, Peebles said.
Ultimately, the plant will employ between 300-400, though it would take as many as 3,000 workers a little more than three years to build it, Peebles added.
Assuming Odebrecht goes ahead with the project, it will provide drillers like Antero a close-proximity end market for one of their major products, wet gas liquids, said Antero CEO Paul Rady.
Some observers, including West Virginia economist Tom Witt, who did a study on the impact of a major cracker in December, predict that such a facility will ramp up drilling rapidly in the three-state region by creating demand for natural gas products.
“The increased demand for ethane may necessitate considerable expansion in natural gas drilling plans, resulting in additional lease acquisition, permitting, drilling, and natural gas production,” Witt wrote in his recent report.
For Denver-based Antero, it's a guaranteed source of demand, and now it has to deliver. Rady said he was eager to do just that.
“We're excited about this opportunity to supply [Odebrecht] and it's a firm commit on Antero's part to supply 30,000 barrels a day of ethane to the newly announced cracker,” Rady said.
