Investors Lease Land for Cracking Plant
Proposed site to be built near Montgomery
Charleston Gazette
10 December 2011
By Paul J. Nyden
CHARLESTON, W.Va. -- A local lawyer, whose company has
leased almost 1,500 acres of land near Montgomery, said he plans
to raise $1 billion by Friday to develop a cracking plant to
process natural gas from the Marcellus Shale reserves.
Richard Neely, a Charleston lawyer and former West Virginia
Supreme Court Justice, is managing a new company called Invictus,
LLC and said the plant will produce a variety of products,
including diesel fuel, gasoline, naphtha and ethylene -- a major
product used by the plastics industry.
Marcellus Shale gas to be used by the plant also contains methane,
propane and ethane.
Invictus has already acquired the rights to 1,456 acres of land to
build a cracking plant and related facilities near Coalburg,
between Montgomery and Cabin Creek.
Most of the facilities will be built on land that was previously a
mountaintop removal coal mine.
Neely said he is already discussing getting Marcellus Shale gases
pipelined to the proposed Invictus plant from Dominion Resources,
a Virginia-based company already working on extracting natural gas
from Marcellus Shale reserves.
"They would send us three million cubic feet of gas a day. They
also said they can afford to build a new pipeline."
Secretary of State Natalie Tenant officially approved the
formation of the new company on October 11.
The proposed cracking plant, Neely said, will create good "union
wage jobs.
We will hire local workers. I am still a card-carrying member of
the International Brotherhood of Electrical Workers."
Before he began serving on the Supreme Court in 1973, Neely
represented unions, including the IBEW and the Building Trades
Council.
"To build the plant, we will employ about 2,000 workers for
two-and-a-half years. When the plant starts operating 24 hours a
day, we will employ about 120 people.
"The plant will indirectly create many other jobs for railroad
workers, truckers, river barge workers and workers at ancillary
plants we will build on the site.
"We will give preference to veterans of Iraq and Afghanistan, as
long as they pass drug tests," Neely said.
He also said the new plant could help revitalize West Virginia
Tech.
"Students would have substantial opportunities for internships and
work-study projects," he said.
Invictus recently filed its first permit application with the West
Virginia Department of Environmental Protection.
DEP Secretary Randy Huffman said on Friday that his agency has not
yet issued any permits for cracking plants anywhere in the state.
With approval for other permits also required, the process is
likely to take at least two years.
Neely estimates it will cost $2 million to get the permits needed,
including $1 million to gain DEP approval of an air-quality permit
application.
"DEP has agreed to let us apply for a permit based on a model
plant. It will take us six months to develop that model. And DEP
may take 18 months to review our permit application."
Invictus must obtain approval for several permits, including
permits for storm waters and wastewaters generated in the plant.
Huffman, who has not yet seen the permit application from
Invictus, said application approval "will take quite a while. What
the actual emissions will be could be hard to narrow down."
The proposed cracking plant will be 850 feet above the banks of
the Kanawha River. The plant's smokestack will be another 200 feet
high.
"The plant is located far from any major population center," Neely
said, "although there are some houses within a quarter of a mile."
The plant is high enough, Neely added, that emissions released
will be dispelled before reaching nearby population centers.
"All refining plants produce waste gases, which in old plants are
simply flared into the air," Neely said. "This plant will include
an electric power generating facility that will use 'waste' gas to
produce steam plus all the power for the plant itself."
Any additional electric power generated will be sold to existing
power grids through three sub-stations near the mouth of Cabin
Creek.
The plant's proposed location will allow easy access to a barge
loading facility that accommodates two large river barges.
Space is also available to develop a railroad siding for 126
tanker cars along the CSX Railroad tracks.
CSX Railroad, Neely pointed out, can transport products directly
to Newport News, Va., a major export port, and to Chicago, a major
railroad hub to ship products anywhere inside the country.
West Virginia state laws and regulations governing the extraction
of Marcellus Shale are still being debated.
On Friday, Gov. Earl Ray Tomblin asked state legislators to come
to a special session at the Capitol, beginning this evening<co
Sunday>, to discuss proposed new regulations.
Earlier this year, a special Senate-House Joint Committee worked
on drafting legislation regulating Marcellus Shale drilling.
Tomblin's office recently suggested several modifications to the
legislation related to topics including: permitting fees, required
"buffer zones" near gas-drilling sites and property rights of
surface owners.
Raamie Barker, Tomblin's spokesperson, said the governor's office
is not yet familiar with the Invictus project.
Neely's partners in the new venture include:
- Michael O. Callaghan, a former head of DEP who is now
Neely's law partner.
- John C. Bullock and Ted Streit of Gaddy Engineering, a
Charleston-based professional land management company.
- Ryan E.M. Cunningham, president of Cunningham Energy, a
major oil and gas exploration and production company based in
Charleston.
"Cunningham and I are the financiers of the project," Neely said.
Invictus recently hired Process Engineering Associates in Oak
Ridge, Tenn., to begin designing and engineering work for the new
cracking facility. Neely called Process Engineering the country's
"best chemical engineering consulting firm."
The Philadelphia law firm of Ballard & Spahr, which works
extensively with Wall Street private equity markets and hedge
funds, is handling legal and financial work for the new company.
To invest in the new company, Neely said, a person must be a
"qualified investor according to SEC [U.S. Securities And Exchange
Commission]. You have to have $1 million in assets and regularly
make $250,000 a year.
Financing will also come from hedge funds."
Reach Paul J. Nyden at pjny...@wvgazette.com or 304-348-5164.