Steam crackers dominate the greenhouse gas emissions

Analysis by Tom Brown, Independent Commodity Intelligence Service (ICIS), April 9, 2021

LONDON (ICIS)–The political will to decarbonise energy-intensive industries is there, the funding is there and, increasingly, the rhetoric of multinational chemicals producer executives is there.

The chemicals sector has traditionally had a difficult time with facing the public, with a campaign by European trade group Cefic in the early 2010s for the sector to become more open and transparent quickly forgotten.

Largely upstream of the industries that the public is aware of, the sector has had little need to present a public face, and the several scandals that tend to emerge every decade, such as the DuPont/Chemours US water contamination lawsuit, encourage a low profile.

The level of attention given to plastic waste and the circular economy has centred the spotlight more firmly on the sector, and large firms seem to be becoming more comfortable with a higher public profile, and the potential for chemicals producers to be perceived as a positive force.

Firms like Germany’s major BASF are also using the ambivalent-to-positive public attention to advocate for support for the sector to help with the dual pressures to decarbonise and to carry out the most radical reworking of production processes since the invention of steam crackers.

ONCE IN A CENTURY SHIFT

The extent that sustainability issues are dominating the agenda for management boards at present was exemplified by BASF’s recent capital markets day, which was overwhelmingly devoted to the company’s decarbonisation plans.

CEO Martin Brudermuller termed the current transition a “once in a century” shift for the sector, and called upon governments to provide financial support for companies to develop and scale the technologies that will allow the sector to decarbonise.

The Germany-based producer has committed to cut its emissions by 60%, compared to 1990 levels, by 2030 but the chemicals production process is a difficult one to decarbonise – steam cracking is not easy to achieve via hydrogen or electricity power.

This is to be achieved by new technologies, bio-based feedstocks and shifting to sustainable power sources but, as the International Energy Agency (IEA) has noted, the tight timeframes for decarbonisation have come about before many systems to cut emissions for energy-intensive sectors have been commercialised.

BASE CHEMICALS THE KEY EMITTER

A key factor will be the expense of decarbonising production processes for lower-margin but widely-used basic chemicals, which make up the lion’s share of BASF’s production emissions.

According to the company, processes for steam cracking, and the production of ammonia, arylic acid, caprolactam, syngas, nitric acid, methyl-diphenyl diisocyanate (MDI), toluene diisocyanate (TDI), hydrogren and ethylene oxide (EO) account for the bulk of its carbon dioxide emissions.

CARBON PRICING STATUS

The difficulty and expense in decarbonising large-scale but lower-margin value chains raises the multi-billion dollar question: will consumers’ interest in sustainability translate to them paying more for basic rather than premium products?

Brudermuller believes so, at least in public. Even US industry trade groups, which tend to be redder in tooth and claw than European bodies on climate issues, have started to endorse carbon pricing mechanisms: “We are convinced that ultimately all players involved will work together to make this once-in-a-century transformation economically successful,” he said, speaking at the company’s capital markets day.

“This also includes consumers accepting higher prices for CO2-free products throughout the value chain to offset higher operating costs and additional investments,” he added.

The company projects that capital expenditure on CO2 reduction technologies will be €1bn in 2021-25, €2bn-3bn in the latter half of the decade, and around €10bn in the 2030s as the innovations reach commercial scale.

Although the most substantial investments are expected down the line, the company is looking for government support in the earlier stages to help de-risk the technology development process, according to Brudermuller. “For very early stage higher-risk technology, you get a higher share of support than you do later, we don’t expect so much support when building world-scale plants, but I think it is fair now when there is such immense pressure to decarbonise,” he said.

PARIS TARGETS, INSUFFICIENT AND UNMET

Governments worldwide are also developing their decarbonisation roadmaps, from hydrogen and renewable energy as a power source to carbon capture for heavy industry to bio-based jet fuel.

With the accession of President Joseph Biden, the US is expected to return at the upcoming UN Climate Change Conference (COP26) in Glasgow, UK, this November. With China also setting out plans to reach net zero by 2060, most of the globe is pushing in the same direction, although the pace of progress remains a cause celebre between governments.

“The Earth’s temperature would still rise about 3.7 degrees [Fahrenheit, or 1.5 degrees Celsius] if we did everything we promised to do in Paris, and we’re not,” said John Kerry, the US’ envoy for climate, speaking at a recent IEA summit.

CRUCIAL DECADE AHEAD

This underscores a key issue with climate abatement measures: that the tipping point of public attention and governmental action is substantial but may have coalesced too late for the technological and structural changes necessary to mitigate the impact of climate change.

The next 10 years may be the most crucial but, as shown by BASF’s projected capex (capital expenditure) schedule, the real substantial work may not begin until the 2030s.

“Do we respect that there are differentiated responsibilities [between countries]? Yes, but we cannot just willy-nilly ignore the next 10 years,” Kerry said. “If we do not do enough in these 10 years, we cannot keep the earth’s temperature [rise] at 1.5 degrees [Celsius].”

Raj Kumar Singh, India’s minister of power, new and renewable energy, was less circumspect on long-term goals, calling the idea of 2060 targets “pie in the sky” when speaking at the IEA event. “When you talk about the challenges before us together… that is something which we need to consider very honestly. We can obfuscate but that is not going to make the problem go away,” he said.

“2060 is a long time away, what are you going to do in the next five years, what are you going to do in the next 10 years? The world wants to know,” he added. “I want to know how many countries have actually accomplished the Kyoto targets.”

NECESSARY INDUSTRIALISATION

Singh also criticised developed world goals that assume that all nations are on track to begin cutting carbon emissions, or for emissions to peak and start to decline in the near future, at a point when advanced economies have already developed, and account for 80% of CO2 emissions.

Some 600 million people in Africa are currently without access to power, according to the African Union.The implications of this, according to Singh, are that advanced economies should be setting their sights on becoming carbon negative, not carbon neutral, to allow for emissions levels from low-income developing countries to increase far enough into the future to achieve widespread industrialisation.

The scale of industrialisation still needed in low-income developing countries provides an opportunity for those societies to leapfrog fossil-based growth entirely, according to John Kerry and a fellow first-world minister on the panel, European Commission Green Deal vice-president Frans Timmermans. “We need to show this can be a just transition, to remove coal, but do it in a way to allow those regions to grasp the opportunities of the new economy,” Timmermans said.

An issue with the leapfrogging concept is that development of coal power is market-driven and installation of new renewable energy capacity is still largely policy-driven, according to BP’s world energy report.

When the need remains to connect more citizens to electrical grids and internet connections, it is easy to see why the cheapest, quickest to set up sources of power remain attractive, however dirty.

The fact that, according to the IMF, the lowest income countries are set to suffer the largest per capita falls in income from the coronavirus pandemic could also drive increased coal power take-up. In the rush to vaccinate populations, there has been little global cooperation between countries, with governments largely looking inward.

Hopefully, after the dust settles, governments will recognise that their fortunes are also tied to helping developing countries rebuild, after largely leaving them to their own fortunes during the pandemic.

Plastics are an overwhelming problem for society

Editorial from Morgantown Dominion Post, August 16, 2019

More than 50 years later, we are still reckoning with that one word.
In an iconic scene in the 1968 film, “The Graduate,” a brief dialogue ensues between the recent college graduate and a family friend at his graduation party.

Mr. McGuire: “I want to say one word to you. Just one word.” Benjamin: “Yes, sir.” Mr. McGuire: “Are you listening?” Benjamin: “Yes, I am.” Mr. McGuire: “Plastics.”

Many have over-analyzed that exchange from a score of perspectives but we’re going to keep it simple here. The future in 1968 was going to be in the booming plastics industry and Benjamin should look to a career in it.

Half a century later we’re wallowing, no, drowning in that industry’s pollution from the high seas to the lowlands.

To its credit, the Monongalia County Commission took the initiative on plastic recycling years ago and has just kept going with it. Ditto for the city of Morgantown contracting with its trash hauler to provide for single-stream recycling.

However, we’re losing the battle on plastics recycling and look to be harming the environment in our efforts. For instance, the good done by the recycling roundups and pickups is often undercut by carbon emissions of the hundreds of vehicles those tons of plastics arrive in. Not to mention the water used to clean them for recycling.

We recently read that despite Lane County, Ore.’s successful roundups it decided to turn over plastic recycling to its residents. After volunteers undergo training to serve as community collectors their goal is to collect two cubic yards of plastic before scheduling a date to drop it off for recycling.

Two cubic yards is approximately the size of a pickup truck bed or a jumbo refrigerator. Collectors may be neighbors, businesses, churches, civic groups or others. Yet, even if that program’s goal of 300 collectors is met it still won’t stem the tide of plastic needing to be recycled.

It’s estimated worldwide, only about 14% or 15% of all plastic is recycled. The problem it would seem is our society generates far more plastic than it needs. We realize there might be bigger issues than goals to collect No. 2, 4 and 5 plastic bottles, jugs, tubs and lids.

But any policies and programs to endlessly recycle single-use cutlery, bottles and straws is delusional without a new approach to this issue. Aiming for no-plastic use for the vast majority of people is unrealistic.

However, we can all do more to overcome our plastics’ addiction. Clearly, consumers may not know where to start, but if everyone takes some responsibility for this issue and government leads we can do better.

If we use less plastics to begin with and collect more of it we can make a greater difference. Otherwise, that one word 50 years from today may just spell, disaster.

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See also: “Marium, The Dugong Who Charmed Thailand, Dies After Ingesting Plastic,” Amy Held, NPR, August 17, 2019

https://www.npr.org/2019/08/17/752042032/marium-the-dugong-that-charmed-thailand-dies-after-ingesting-plastic/

Virtually no regulations to protect the public !!!

From an Article by Sharon Kelly, DeSmog Blog, April 12, 2019

This week, at an industry conference focused on wooing petrochemical producers to West Virginia, officials from the state and federal government made clear their support for continuing fracked shale gas extraction and petrochemical industry development near the natural gas-rich Marcellus Shale.

Why should petrochemical companies build in West Virginia, Pennsylvania, and Ohio? For one thing, don’t expect regulation of shale gas drilling, Michael Graney, executive director of the West Virginia Development Office, predicted in his presentation.

“Contrasted to other U.S. regions, Tri-State region is industry-supportive and industry-friendly,” read a slide that Graney, who was appointed by West Virginia Governor Jim Justice in September 2018, presented to the conference. “Virtually no risk of drilling restrictions.”

Graney also elicited “hallelujahs” from the crowd after describing West Virginia’s low worker turnover rates. “We have earned an A from the Cato Institute in fiscal policies,” he told representatives from fossil fuel and petrochemical companies, referring to a libertarian think tank that Sourcewatch describes as “founded by Charles G. Koch and funded by the Koch brothers.”

‘Everything within the government’s power’

Shell is already building a massive plastic manufacturing plant reliant on fracked-gas feedstocks known as an “ethane cracker,” in Pennsylvania. Credit: Sharon Kelly, DeSmog

At the ninth annual West Virginia Manufacturers Association’s Marcellus and Manufacturing Development Conference, officials from the U.S. Department of Energy (DOE) offered the petrochemical industry the services of the federal government.

“And what we’re going to do is everything within the government’s power to shine a bright light on this and help get this over the finish line,” Steven Winberg, the Department of Energy’s Assistant Secretary for Fossil Energy, told the conference. “With regard to DOE, there’s a couple of things that we can do. One is, private sector investors can take advantage of the DOE’s loan guarantee program.”

“We can walk you through that process, the loan guarantee process that the DOE has,” he continued.

Second, the Department of Energy hired a full-time staffer to push for petrochemical projects, according to Winberg, a former vice president for the coal and natural gas producer CONSOL Energy. “Secretary Perry gave me instructions to get somebody on board full time to work on behalf of the federal government to make this happen. And that somebody is Ken Humphreys.”

“I want to put a name with a face — so this is your guy here,” Winberg said, asking Humphreys to stand. “It is his job to do whatever the federal government can to help make this a reality.”

Humphreys served from 2010 to 2016 as the CEO of the FutureGen Industrial Alliance, which represented a group of nine coal and power companies, including CONSOL Energy, which were seeking Department of Energy funding for a carbon capture project, according to SourceWatch.

That project left behind a troubled history before its ultimate cancellation. In 2005, the DOE predicted FutureGen would be a “prototype of the fossil-fueled power plant of the future.” In 2008, the DOE announced the project would be re-structured amid cost over-runs.

In 2009, a House of Representatives subcommittee report examined the project’s viability. “DOE was extremely reluctant to produce documents to the Committee so that it could determine exactly how decisions were made concerning FutureGen,” that report found. “In retrospect, FutureGen appears to have been nothing more than a public relations ploy for Bush Administration officials to make it appear to the public and the world that the United States was doing something to address global warming despite its refusal to ratify the Kyoto Protocol.”

However, the project was modified and revived, with $1 billion in federal stimulus funding promised — then canceled entirely in 2015, after remaining behind schedule and over-budget.

National Energy Technology Laboratory Chief — With a Petrochemical Past

Winberg was not the only DOE official offering the services of the federal government to the industry at this conference. Brian Anderson was appointed in November to run the National Energy Technology Laboratory (NETL), part of the Energy Department.

Anderson, as DeSmog previously reported, had been “listed as one of the principals” by Appalachia Development Group, which has sought to develop an underground storage site for natural gas liquids, the raw materials from gas wells that can be used by petrochemical manufacturers.

“Since he became the director at NETL, which falls under the Department of Energy umbrella, Anderson said he’s severed all connections with Appalachia Development Group,” the Pittsburgh Post-Gazette reported on November 27, 2018.

In January, Anderson had been slated to speak at the West Virginia Energy Infrastructure Summit. DeSmog reporter Steve Horn raised questions about potential conflicts of interest, given Anderson’s role at Appalachia Development Group.

“The Department follows all federal laws and ethics requirements regarding onboarding new employees,” a DOE spokesperson told DeSmog. “The employee in question has been counseled regarding recusal from matters relating to past employers.” Anderson never spoke at that conference.

At this week’s conference, Anderson’s presentation focused on the support that his new federal office could provide for the fossil fuel industry — and for the region’s petrochemical industry in particular.

“Effectively the question is, what is the Marcellus going to do for us in manufacturing in this region?” Anderson told the audience of industry representatives. “And so, within that big question is what can NETL do within this region, as a partner in manufacturing?”

“We manage a $6.6 billion research portfolio across the U.S. and globe,” he added, describing various NETL “research projects to ensure that fossil energy can stay competitive as well as meet some of those emissions goals of our country and the globe.”

Anderson emphasized that even though petrochemical projects produce goods, not energy, supporting the industry through research fell within NETL’s Congressional mandate. “And so, the Department of Energy, one of our missions — within our mission — is to use our natural resources, our energy natural resources responsibly,” Anderson told the conference. “And it’s a responsible use of the natural gas liquids resource not to burn it, but to use it for building and manufacturing.”

A slide from Anderson’s presentation for NETL, titled “Energizing Regional Innovation Through Partnerships,” displayed logos from the Appalachia Storage and Trading Hub, a project planned by Appalachia Development Group, and from MATRIC, an owner of the Appalachian Development Group.

Taking the Federal Government’s Help

Appalachia Development Group — Anderson’s former firm — has been making strides toward obtaining loan guarantees from the DOE, Joe Bozada, a company executive, told the conference, including a loan guarantee roughly twice the size of the $1 billion DOE support offered to the FutureGen project.

“So, that’s a $1.9 billion loan guarantee,” Bozada told the conference. “We successfully completed that part one, and we’ve been invited to participate in part two,” of the DOE’s process.

“In the past 18 months, we’ve actually completed a lot of work,” he said. “One was getting the application to the loan permit office, that was very, very tough to do. And many folks in the room were actually part of that, so thank you for that.”

While company representatives spoke of the importance of federal assistance, the state’s political representatives expressed their support — and also decried the notion that the government should play favorites.

“We can’t allow the federal government to pick winners and losers when it comes to our energy policy,” Senator Joe Manchin said in a video recorded for the conference, “and we certainly can’t have them demonizing the resources that have powered this nation for decades. Coal and natural gas is a big part of that.”​

Meanwhile, outside the conference, Ohio Valley Environmental Coalition Project Coordinator Dustin White spoke to a rally organized in opposition to the petrochemical industry’s plans for the region, The Dominion Post reported. “They scream jobs and like a carrot on a stick, and politicians chase them,” White said.

“The [Appalachian Storage Hub] scheme is an unimaginative regression to 1950s era economic development,” White said in a statement. “Why can’t we have real innovation?”

“It is of upmost importance that people see these current and proposed petrochemical projects in Appalachia for what they are: a scheme that the oil and gas companies are using to bail themselves out of debt,” said Bridgeport, Ohio, resident, Bev Reed, who also attended the rally and lives near the site of a proposed plastic factory. “The tide needs to shift to alternatives to plastic, rather than creating more.”

Main image: A slide from a presentation by West Virginia official Michael Graney, who listed “virtually no risk of drilling restrictions” as a reason to bring fracked-gas reliant petrochemical development to the region. Credit: Sharon Kelly, DeSmog

Methanol will cause blindness if consumed

From an Article by Jamison Cocklin, Natural Gas Intelligence, October 15, 2018

Houston-based Primus Green Energy Inc. is finally moving forward with plans to develop a small-scale gas-to-liquids (GTL) facility in West Virginia after partnering with an international engineering, procurement and construction firm to improve the project’s economics.

The facility, which is planned to be at the site of Covestro AG’s chemical production facility in New Martinsville, was initially slated to begin operations in 4Q2017. Service was later delayed until 2018, but Primus said this month operations would now start in 2020, thanks partly to a partnership with Jereh Oil and Gas Engineering Corp.

“Primus has long envisioned development of a methanol plant in the Marcellus region, but it is our relationship with Jereh and other strategic partners that has resulted in substantially improved economics and will allow us to move the project forward,” said Primus CEO Steven Murray. “With gas supply and methanol offtake agreements from an integrated oil and gas company, assistance from Sumitomo Mitsui Banking Corp. to arrange project debt financing, and design work by Koch Modular Process Systems, the project economics are very strong.”

Similar small-scale GTL facilities, which have smaller and more efficient equipment, have been announced for the Appalachian Basin, but none have entered service. The modular plants are said to be deployed more easily, making them a cost-effective alternative to larger refinery-sized plants.

Primus said the modular units would be fabricated off site by Jereh and Koch Modular, then be transported to the project location for final assembly. The company has developed a technology for converting various feedstocks, including wellhead and pipeline natural gas, natural gas liquids and synthesis gas, into methanol, gasoline and diluent.

The facility would produce about 160 metric tons (mt) a day of methanol, using as little as 6 MMcf/d of feed gas. The technology has been tested at a scale plant in Hillsborough, NJ.

The facility would be the second of its kind to enter operations if it starts up as planned in 2020. US Methanol Corp. broke ground last year on a similar methanol plant that would use Marcellus Shale gas. That plant is being built in Institute near Charleston, where Dow Chemical Co. has a facility.

While the Primus plant would produce about 58,400 mt/year (mty), US Methanol’s facility is larger, with a capacity of 200,000 mty

Methanol is used in a wide-array of products including antifreeze and solvents. It’s also an important product for the petrochemical industry, which is expected to grow in Appalachia once ethylene and polyethylene production begins at ethane crackers that have been proposed or are under construction in the region.

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China tariff on US methanol heats up the trade war

 SPECIAL REPORT ON POSSIBLE ETHANE CRACKERS

Introduction

The Governors of WV, PA and OH are all dreaming and scheming for the siting of a major new chemical industry in their State.   The reports below are all drawn from Internet web-sites that relate to this main theme.  What we discover here is the extent to which ethane cracking planning is active in the chemical industry worldwide, that crackers are in the planning stage for Texas and/or Louisiana and a few foreign countries around the world.  Whether a cracker plant will be built here in northern Appalachia is yet to be determined.  Shell Chemical (Royal Dutch Shell) promised to announce a cracker in 2011, then in January of 2012.  Now that has come and past, so we wait to see.  In this case, no news is not good news for the Governor(s).

WV Odds of Winning a Cracker Plant Not Clear (Reference)

Shell Chemicals officials recently stated they would be announcing where they would be considering placement of an ethane cracker chemical plant. Such a facility would utilize the ethane from “wet” natural gas to produce ethylene.  The ethylene would then be reacted to form other chemicals, perhaps polyethylene or other chemical substances in large quantities.  This offers hope to revitalize West Virginia’s chemical industry.

Dan Carlson, general manager of business development for Shell Chemicals recently outlined numerous factors in which West Virginia will need to outshine Pennsylvania and Ohio in order to have a cracker facility located in the state. Some of the factors being considered include the regulatory environment, access to ethane-rich gas fields, transportation infrastructure, power grid infrastructure, underground storage facilities, availability, skills and cost of local workforce, proximity to Northeast markets, and the cost and ease of doing business in the respective states.

Carlson said: “We hope to reach a decision on the location of the cracker by the end of this year and plan on announcing it in January.”  [So here we are in February and all we know is that a cracker is feasible; but, the incredibly high cost of the investment is a clear obstacle for any company. DGN]

So-called “wet” natural gas contains up to about 15% ethane; and, such Marcellus natural gas is  located primarily in the region north of Route 33 and west of I-79. Chesapeake recently announced plans to ship at least 75,000 barrels of ethane daily from the Appalachian region to Texas for use by the petrochemical industry on the Gulf Coast. Other companies, including Range Resources and MarkWest, have also made plans for ethane delivery to Louisiana, Texas or Canada. Ethane production estimates from the West Virginia Marcellus shale are as high as 270,000 barrels per day. A cracker facility would utilize up to 65,000 or 85,000 barrels per day, typically.

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CEO: Aither Chemical Wants Multiple Plants in Region (Reference)

Aither Chemicals of South Charleston, WV,  would like to build multiple ethane-processing plants in WV and PA. But, finding funding and a site for the first one is the immediate challenge for its initial ethane catalytic cracker plant. Aither and its Pittsburgh-based partner, Renewable Manufacturing Gateway, a nonprofit clean energy job-creation group, have identified several suitable commercial plant locations in western Pennsylvania, eastern Ohio and northern West Virginia, including one in Beaver County. PA. The former steel mill site along the Ohio River also reportedly is under consideration by Royal Dutch Shell for an ethane steam cracker plant.

This company’s process, using variations on methods developed by Union Carbide Corporation decades ago but never used in commercial operation, is cheaper and cleaner than the steam cracker system. According to Aither’s CEO, it consumes 80 percent less energy and produces 60 percent less carbon dioxide output.

 “Aither wants to lead the renaissance of petrochemicals in the region,” he said, noting that this could be the biggest growth in an industry since steel was king in the area.

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Chevron Phillips Chemical Plans Texas Ethane Cracker for 2017 (Reference)

The company will build a world-scale cracker at its existing Cedar Bayou complex as well as two nearby polyethylene units.

Chevron has executed agreements with The Shaw Group to design the 1.5 million tpy (3.3 billion pounds/year) ethane cracker utilizing proprietary Shaw technology. Chevron Phillips Chemical’s proprietary technologies would also be utilized to build two new polyethylene facilities, each with an annual capacity of 500,000 metric tons (1.1 billion pounds), the company said.

The new polyethylene units would be located either at the Cedar Bayou facility or a site nearby the Chevron Phillips Chemical Sweeny facility in Old Ocean, Texas. A final site selection decision for these units is anticipated during the first quarter of 2012 with final approvals in 2013 and estimated completion in 2017.

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APLA: Brazil‘s First Major Petrochemical Company Makes its Mark (Reference)

Brazil’s leading petrochemical company is making an impact on the global stage. Brazilian polymers major Braskem is delivering on its promise to expand into new territories. The company is implementing projects in Mexico and Venezuela, and also has production plants in the US and Germany following the acquisition of US-based Sunoco’s  polypropylene (PP) business in 2010 and US-based  Dow Chemical’s PP business in 2011.

With the purchase of the Dow PP business, Braskem says it has become the leading PP producer in the US, the world’s largest PP consuming country, with 1.425m tonnes/year of capacity. The acquisition, concluded in September, gives Braskem two plants in the US (Freeport and Seadrift, both in Texas) and two in Germany (Wesseling and ­Schkopau). The Sunoco PP acquisition gave Braskem its “initial beachhead” in the US, says Luiz de Mendonca, executive vice president for the company’s international business. “With the Dow acquisition, we are able to expand that presence.”

Further investments in the US could involve expanding into new product areas beyond PP, he suggests. Braskem, like most petrochemicals producers with operations in North America, is monitoring opportunities to invest in new ethylene capacity to take advantage of the rich ethane reserves in the Marcellus Shale natural gas deposit, which is largely concentrated in Pennsylvania.

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Sasol Plans $3.5 to $4.5 Billion Ethane Cracker, Ethylene Project in Lake Charles, LA (Rererence)

Sasol Ltd. of South Africa is planning to add a multibillion ethane cracker and ethylene-derivative project to its Lake Charles facility in Louisiana, in part to leverage on the rapid development of shale gas in North America.

The project, estimated at a cost of $3.5 billion to $4.5 billion, could produce between 1 million and 1.4 million tons per year of ethylene. Sasol’s board of directors has approved the advancement of the project into a feasibility study, which is slated to complete in the second half of the company’s fiscal 2013. Companies reportedly looking to build new crackers include Chevron Philips Chemical Co., Royal Dutch Shell Plc., Formosa Plastics Corp. and Braskem.

Bayer CropScience Plant Entrance, Institute, WV AP photo/Jeff Gentner

Bayer Corporation wants to have a convenient supply of product for its New Martinsville,WV and Institute, WV manufacturing plants and Acting Governor Earl Ray Tomblin has created a Marcellus to Manufacturing Task Force charged with the mission of making that happen for Bayer and potentially other chemical corporations.  The Governor has ordered the executives of several gas production companies, as well as other helpful principles such as reps from economic development agencies, labor, and state government to come to the table with Bayer Corporation and the Chemical Alliance Zone primarily for the purpose of expediting the development of an ethane cracker plant.  An ethane cracker plant is the missing link between the natural gas industry and the chemical industry.  It converts ethane, another constituent of natural gas, to ethylene.  Bayer currently purchases an estimated 200 million pounds of ethylene oxide which is shipped from the Gulf region for use as feedstock in manufacturing other chemical compounds.

Before mid-January, when Dominion Resources announced that it has reached an agreement with PPG Industries on an option for Dominion to purchase land at PPG’s Natrium, WV, site,  it seemed unlikely that a ethane cracker plant, estimated cost $1 billion, would materialize in West Virginia.  The land is being purchased by Dominion as a site for a fractionation plant to separate non-methane components, including ethane, butane and propane, from natural gas.  The Natrium site is only about 9 miles north of Bayer’s New Martinsville, W.Va. facility and is close to Dominion’s TL-404 pipeline which that firm plans to convert into a wet gas service line.   Natural gas is referred to as wet gas before the heavier hydrocarbons such as ethane are removed.  The Natrium site also is close to railroad, pipeline and barging services for transport of natural gas liquids.

As independent efforts by Bayer to entice a cracker plant to move in next door appear to have been nonproductive, it would greatly behoove Bayer to negotiate a deal to build a stakeholder partnership between the gas producers, the fractionator (Dominion), and an ethane producer/cracker plant operator.   In addition to the cost savings of cheaper feedstock (transport costs nearly eliminated) as a motivator, the company has recently had to adapt to the loss of production.  In August, 2010, Bayer was forced to agree to phase out production of aldicarb (trade name Temik) after this EPA finding: A new risk assessment conducted by EPA based on recently submitted toxicity data indicates that aldicarb no longer meets our rigorous food safety standards and may pose unacceptable dietary risks, especially to infants and young children. A closely related issue is the storage of methyl isocyanate gas (MIC), an ingredient of aldicarb, at the Institute plant.  Twice as much of the highly toxic compound was stored there as was involved in the grueseome catastrophe in Bhopal, India in 1984.  Half a million people were injured or killed after an explosion released the deadly MIC gas at a Union Carbide plant – the worlds’s worst industrial disaster.   There had been public pressure to eliminate the storage of MIC at Institute prior to an August 2008 explosion at the Institute plant which killed 2 workers and led a congressional investigation to conclude that “it could have been worse than Bhopal.”  This issue has been in recent news and a hearing is scheduled for Feb. 25th.   The point is that Bayer has idle capacity at both of its WV plants; in January it was announced that 220 workers would be laid off at Institute, 44% of their workforce there.  Bayer has motivation to be flexible in negotiations for a cracker plant deal as it seeks ways to return the plant to capacity.  Incidentally, Bayer’s new CEO, Greg Babe, has a personal connection with New Martinsville; it’s his hometown.

A cracker in West Virginia would benefit the gas production companies because then the ethane would not have to be piped elsewhere. Historically, natural gas production has been the magnet for ethane crackers.  Currently pipeline projects are being planned to move Marcellus ethane to the crackers in the Gulf region.

Among the likely candidates which may be courted for cracker plant development are Chevron, Shell, Exxon and Reliance, each of which have a more than $1 billion stake in the Marcellus Shale. Others are BP, Dow Chemical,  Formosa Plastics, LyondellBasell, Koch Industries, and Westlake Chemical.

Will the public be expected to be a partner in this venture?  Will TIF funds be awarded a project that emerges from the Task Force efforts?  Why is there public representation in a corporate businessroom?  Will, in fact, we, the citizens of West Virginia, be expected to participate in a public plan to subsidize private industry in a recovery which would lead to job creation or restoration?   Of course, Bayer may not be the only chemical corporation to benefit.  But it is certainly poised to be the immediate beneficiary of  any successful effort to bring an ethane cracker plant to the Kanawha Valley area.