Ethane Cracker Plant Might be Built in Institute
South Charleston firm expected to announce $300M project next
week
Charleston Gazette
16 March 2012
By Eric Eyre
CHARLESTON, W.Va. -- South Charleston-based Aither Chemicals is
expected to announce plans next week to build a $300 million
ethane catalytic "cracker" plant that would employ up to 200
workers at the Institute Industrial Park by 2015, according to
state officials and economic development leaders familiar with the
deal.
Aither plans to partner with Bayer CropScience and MarkWest Energy
on the cracker project. The petrochemical facility would convert
ethane from the Marcellus Shale into ethylene, which is used to
make plastics.
A news conference to announce the Institute cracker was scheduled
initially for Monday, but might be pushed back to Wednesday.
"We are planning to have some kind of announcement Wednesday,"
Aither CEO Len Dolhert said Friday afternoon. "Things are in the
works. There are moving components, and we need to get those
things arranged."
The plant is expected to hire some employees being laid off from
the Bayer CropScience facility at Institute. Last year, Bayer
announced plans to shut down its methyl isocyanate, or MIC,
production unit and cut 220 jobs. That move was prompted by
Bayer's agreement with the U.S. Environmental Protection Agency in
2010 to phase out the pesticide aldicarb because of its health
risks, especially to children.
Aither is expected to build the cracker plant in stages, starting
with a smaller production facility at Institute. Full-scale
production is expected to begin in 2015. The plant would generate
about $500 million in annual sales.
Aither's announcement might help soothe state political and
business leaders' disappointment over Shell Oil Co.'s decision
this week to consider locating a multibillion-dollar cracker plant
in Monaca, Pa. -- although the Aither facility would be
significantly smaller than the proposed Shell cracker.
Shell picked the southwestern Pennsylvania site over, among other
places, a location in West Virginia's Northern Panhandle.
In late January, Gov. Earl Ray Tomblin signed into law a tax
incentive plan designed to lure a massive cracker plant to West
Virginia. The legislation slashed property taxes for a company
that builds an ethane cracking plant that costs $2 billion or
more.
Aither plans to spend $300 million to $500 million to build the
cracker in Institute, so the company wouldn't qualify under that
tax incentive plan.
However, Dolhert said Aither would expect a similar tax break.
"We hope to get all the tax incentives afforded to any cracker,"
he said, "no matter the size."
Denver-based MarkWest Energy plans to supply ethane to Aither
Chemicals' cracker in Institute. MarkWest gathers, processes and
transports natural gas drilled by larger companies, such as
Chesapeake Energy.
"It's a midstream company that handles everything on top of the
ground," Dolhert said.
Dolhert said Aither's cracking process -- developed by Union
Carbide Corp. decades ago -- is cheaper and cleaner than
traditional steam cracking facilities like the one being built by
Shell in Pennsylvania.
"It uses 80 percent less energy and provides 90 percent less
carbon dioxide," Dolhert said. "It's a lower-cost process."
Aither's catalytic cracker project could attract other
"downstream" companies -- those that use ethylene to manufacture
plastics and other products -- to the Kanawha Valley.
Dolhert said Aither plans to build three cracker plants in the
Appalachian region, and West Virginia's Northern Panhandle could
be in the running for one of the others. The chemical company also
is looking at sites in Aliquippa, Pa. -- near the proposed Shell
cracker site -- and eastern Ohio for the additional petrochemical
facilities.
Aither previously announced plans to spend $750 million for each
cracker, but the company's investment at the Institute Industrial
Park would be considerably less because Bayer CropScience already
has equipment, piping and facilities at the site, Dolhert said.
"The cost depends on what you put in the place and whether the
infrastructure is already in place," he said.
Aither is actively raising money for its proposed crackers.
The company recently secured $200,000 in financing from Renewable
Manufacturing Gateway, a Pittsburgh-based investment group.
Last June, the West Virginia Jobs Investment Trust, the state's
venture-capital agency, closed on a $250,000 loan with Aither. The
loan's principal can be converted to stock.
In January, Innova Commercialization Group in Fairmont invested
$200,000 in Aither through the West Virginia Capital Access
Program, which uses federal stimulus funds to help small
businesses.
"We're in the process of raising hundreds of millions of dollars,"
Dolhert said.
Aither, which currently has 10 employees, spun off from the
Mid-Atlantic Technology, Research & Innovation and Research
Center, or MATRIC, an organization located at the West Virginia
Education, Research and Technology Park in South Charleston.
Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.