Marcellus Shale Sparks Start-up’s Plans to Build Ethane Plant
Pittsburgh Business Times
26 August 2011
By Anya Litvak
A West Virginia start-up that has developed a cheaper way to convert a
natural gas liquid into a feedstock for the chemical industry is in the
market for investors and plant sites in its home state and in
southwestern Pennsylvania.
Aither Chemicals LLC CEO Len Dolhert said his company’s technology for
converting, or cracking, ethane extracted from the wet part of the
Marcellus Shale play can be used for plants as small as $200 million.
Capital costs for a traditional steam cracker would be expected to be
at least $1 billion.
The company, which received an initial investment of $250,000 from the
state of West Virginia this month, is looking for funding to cover a
$35 million operations budget for the next three or more years. It also
is working to build its first cracker plant, expected to run anywhere
from $200 million to $800 million. Dolhert expects the first plant to
be operational within three to five years.
Economic development officials and the chemical industry have been
enlivened by the possibility of an ethane plant in the region because
it would provide a steady supply of material for area chemical
companies, and might attract new ones to the region.
Dolhert said he’s toured potential sites in Institute and New
Martinsville, W.Va., on Bayer Corp.’s campuses there and has spoken
with Greg Babe, Bayer’s CEO about a business partnership.
Bayer spokesman Bryan Iams said the company is still in discussions
with “several interested companies who are considering our two sites to
build an ethane cracker,” but declined to confirm if Aither is among
them.
“There’s incredible amount of ethane in West Virginia and an incredible
amount of (momentum for) having us not only in the state but at
specific Bayer sites,” Dolhert said. “But there will be ethane
available in Pennsylvania, so we hope to have plants there, too.”
One of the sites Aither has considered in Pennsylvania is Houston,
where MarkWest Energy Partners LP has built a large fractionation
complex, a gas processing facility that separates natural gas liquids
from the gas stream.
In investor documents, MarkWest said it has the capacity to process
40,000 barrels of Marcellus ethane each day. By this time next year,
that will be 70,000 barrels daily.
Other than Houston, Aither would aim to have Pennsylvania plants
located north of Pittsburgh, Dolhert said, as all the ethane produced
south of the city can be easily transported to West Virginia for
processing.
Rex Energy Corp. has been drilling for liquids-rich gas in Butler
County, and EQT Corp. and Range Resources have wells in Beaver County,
also in the wet gas region.
Ken Raybuck, executive director of the Community Development Corp. of
Butler County, said he’s heard Aither might be looking for sites for a
small cracker plant but has not been in touch with the company. Raybuck
said he would aggressively pursue the opportunity if it exists because
of the economic development potential of having an ethane cracker in
the region.
Tim Fogarty, vice president of energy programs at Innovation Works,
said the group is “enthusiastic about the work that Aither’s doing” and
would like to see it successfully commercialized but doesn’t know how
it would fit into that yet.
“We’re definitely looking at it because it’s got great impact for
western Pennsylvania,” Fogarty said.
“I hope that Innovation Works becomes an investor,” Dolhert said.
ORIGINS
A conventional ethane processing plant breaks up ethane into its
components by heating it at very high temperatures.
Dolhert calls it a “brute force reaction” that requires tremendous
amounts of energy and space to break up the carbon bonds.
Aither’s process passes the natural gas liquid over a ceramic catalyst,
which separates it into the desired components.
The technology sprung out of Union Carbide Corp., whose veterans went
on to found MATRIC, or the Mid-Atlantic Technology, Research and
Innovation Center, a nonprofit research center in West Virginia from
which Aither spun out.
According to Dolhert, Union tried to commercialize the process in the
1980s but was derailed first by the environmental disaster at Bhopal in
India and then by the prevailing view that oil prices would remain low
and natural gas liquids would gradually become more expensive, which
made oil the preferred feedstock for chemical production.
Most ethane steam cracking plants are in the Gulf Coast area, and
expanding capacity has meant applying existing technology, Dolhert
said..
“But if you’re going to build something completely new, like in the
Marcellus region,” he said, then there is the opportunity to use more
up-to-date technology.
Aither was formed for just that reason — it’s tagline is “capitalizing
on the abundance of ethane in Appalachia.”
Anya Litvak covers energy, transportation, gaming and accounting.
Contact her at alitvak@bizjournals.com or (412) 208-3824.