Daelim Chemical USA, a major investment partner in a proposed ethane cracker plant in Belmont County, Ohio, across the river from Moundsville, West Virginia, announced on Tuesday that it is exiting the project.
In a joint statement with PTTGC America LLC, the Thailand-based company driving the project in the Ohio Valley, an executive said that despite Daelim’s withdrawal, the project remains a “top priority.”
“We are in the process of seeking a new partner whilst working toward a final investment decision,” the head of PTTGC America, Toasaporn Boonyapipat, said. “We look forward to making an announcement by the end of this year or early next year on this transformative project for the Ohio Valley Region. We wish Daelim well and appreciate its contributions to our effort.”
The proposed Belmont County cracker plant has been in the works for a few years and has faced a growing backlash from some in the local community who fear the project could fuel a new petrochemical industry that could be harmful for the climate and health and safety of residents.
In 2018, Daelim announced it was partnering with PTTGC America on the project. The companies purchased 500 acres of land along the Ohio River in Dilles Bottom, where a coal-fired power plant once operated.
If constructed, the plant would take ethane — a product of natural gas — and produce up to 1.5 metric tons annually of ethylene, a feedstock used in plastics and chemical manufacturing. The plant’s air permit estimates the cracker would produce the equivalent carbon dioxide emissions of putting about 365,000 cars on the road.
According to PTTGC America, the project would invest $47.5 million over 15 years in education and other community needs while also generating more than $20 million in sales tax revenue during construction.
In their statement, both companies cited the economic uncertainty tied to the COVID-19 pandemic, including oil price volatility, as reasons for rethinking the investment in the Ohio Valley.
A recent report by the Trump administration found expanding the Ohio Valley’s petrochemical industry could be an unprecedented source of economic opportunity and growth when the county, and region, eventually emerge from the COVID-19 pandemic.
However, recent analyses by the Institute for Energy Economics and Financial Analysis, a think tank whose mission is to accelerate the transition to a diverse and sustainable energy economy, found changing market conditions, exacerbated further by the coronavirus pandemic, call into question the economic viability of petrochemical investments in the Ohio Valley, including Shell’s Monaca cracker plant, currently under construction near Pittsburgh in Beaver County, Pennsylvania.
West Virginia lawmakers heard testimony Tuesday from a top Department of Energy official that the federal government is prioritizing building out a petrochemical industry in Appalachia.
Speaking in front of the Joint Committee on Natural Gas Development, Steven Winberg, DOE’s assistant secretary for fossil energy, told lawmakers his agency and the Trump administration believe the Ohio Valley is “on the cusp of an Appalachian petrochemical renaissance.”
“Federal efforts are strong and continue to gain momentum,” Winberg said. “We also recognize that others are doing a lot and we believe that together we can make this Appalachian petrochemical Renaissance happen for the benefit of the industry, the region and the country.”
West Virginia, Pennsylvania and Ohio sit on top of some of the country’s largest reserves of ethane-rich natural “wet” gas, which can be processed into the chemical and plastics feedstocks.
According to a2017 U.S. Department of Energy report, U.S. natural gas liquids production in the region is projected to increase over 700 percent in the 10 years from 2013 to 2023.
Winberg said the federal government is devoting resources into ensuring pipelines, ethane storage and cracker plants are built in the region, including to get final investment in a proposed cracker plant in Belmont County, Ohio.
Thailand-basedPTT Global Chemical, and its partner South Korea’s Daelim Industrial Co., have applied for permits and purchased 500 acres of land in Dilles Bottom, just a few miles from both Shadyside, Ohio, and Moundsville, West Virginia, just across the Ohio River. About 30 miles northwest of Pittsburgh, Shell’s Monaca cracker plant is already under construction. It’s slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers when done, according to the company.
Winberg urged West Virginia lawmakers to invest now in preparing sites for possible cracker development.
“What we need, ladies and gentlemen, is one of these crackers in West Virginia,” he told the committee. “These crackers are the anchor facilities that will drive job growth in this region.”
The American Chemistry Council estimates the hub could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.
Gov. Jim Justice in January said the development of underground natural gas liquids storage, or the so-called Appalachian Storage and Trading Hub, is his office’s “number one economic focus.”
On the hub, Winberg said it’s a top priority for the Trump administration.
“At DOE we have a full court press on this,” he said.
Environmental groups feverently oppose this kind of development. Dustin White with the Ohio Valley Environmental Coalition said bringing the petrochemical industry to the region would subject residents to public health, environmental and climate impacts with limited economic benefits.
He argued automation would likely replace the need for human workers at the majority of these facilities, and he likened a petrochemical future in Appalachia to what has already occurred in the Gulf Coast. Louisiana and neighboring states are currently home the bulk of the nation’s chemical and plastics industry, and dubbed by some as “cancer alley” due to high levels of cancer and other diseases.
“Once again the human health impacts and safety were not brought up,” White said of Winberg’s presentation. “From my perspective, it’s all false hope.”
He urged lawmakers to invest public tax dollars instead in renewable energy and other non-fossil fuel-based industries, especially as an increasing number of cities and nations ban the use of single-use plastic, which would be a central end product of the proposed Appalchian petrochemical buildout.
State and federal politicians announced initiatives this week to move forward an effort to build a major underground natural gas liquids storage facility in the Ohio Valley, an effort opposed by environmental activists who fear a petrochemical expansion in the region will threaten not only the environment, but public health.
The Appalachian Storage and Trading Hub has been in the works for almost a decade. Developers are seeking billions in loan guarantees from the Department of Energy.
This week, Gov. Jim Justice met with officials from the U.S. Department of Energy to discuss the hub and developing the petrochemical industry in West Virginia. In a press release the governor said he would appoint a liaison to work with Energy Department officials on these issues.
“It is absolutely vital that we create a petrochemical industry in West Virginia versus building more pipelines that leave our state without creating any long-term manufacturing jobs,” Justice stated.
Officials from West Virginia, Ohio and Pennsylvania support efforts to bring cracker plants and other plastics manufacturing infrastructure to the Ohio Valley, which sits upon two of the nation’s most productive natural gas and natural gas liquids repositories, the Marcellus and Utica shale formations.
A 2018 study by the Department of Energy estimates the largest growth in natural gas liquids production is expected from this region.
“Ethane production in Appalachia is projected to continue its rapid growth in the coming years, reaching 640,000 barrels per day in 2025 – more than 20 times greater than regional ethane production in 2013,” the report states.
The announcement coincided with the Marcellus to Manufacturing Development Conference held this week in Morgantown. The conference, organized by the West Virginia Manufacturers Association, brought together officials and business representatives from across the region, largely to discuss expanding petrochemical manufacturing in West Virginia.
Conference keynote speaker West Virginia Commerce Secretary Ed Gaunch told attendees his agency actively wants to help bring plastics and other petrochemical manufacturers to the state.
“The sun’s about to shine on this wonderful state,” he said. “Opportunities abound in West Virginia.”
‘People Over Petro’
Credit Jesse Wright / WVPB
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WVPB
Protesters in front of the Waterfront Marriot Hotel Tuesday, April 9, in Morgantown, W.Va.
Not everyone sees it that way, and those opposed to the petrochemical buildout say they’ve struggled to be heard by elected officials.
“Petrochemicals are not energy. It’s plastic,” said Belmont County, Ohio resident Bev Reed. “It’s a dead product that doesn’t go anywhere except to poison people.”
Reed was one of about 40 protestors who gathered outside the conference. Protestors carried colorful signs, some with plastic grocery bags attached that whipped in the wind, and chanted “people over petro, people over plastics, people over profit.”
Activists voiced concerns that turning the region into the next plastics manufacturing center would place the state’s natural resources at risk, and harm its people, many of whom are already impacted by resource extraction.
Lawmakers in favor of the proposed of the petrochemical expansion often cite an American Chemistry Council study that projects the industry would bring 100,000 jobs to the region. It also estimates 60% of plastic production would be for food products.
Potential investment into the Ohio Valley’s petrochemical buildout comes at a time when some cities and companies around the globe are pledging to discontinue use of single use plastic.
Protestor BJ McManama with the Indigenous Environmental Network pushed back on the argument that a petrochemical future is the only one that can bring new jobs to the area.
“They shout jobs, jobs, jobs, making it sound like we don’t want jobs. We want handouts. We don’t want you guys have jobs. No, that’s not right,” she said. “We want clean, safe, sustainable jobs that create resilient, happy and peaceful communities.”
Federal Support
A long-sought, and key component, to creating a petrochemical industry in the Ohio Valley is building storage for ethane. Ethane is a component of the natural gas liquids abundant in the region, and a building block of plastic.
Both of West Virginia’s U.S. Senators, Democrat Joe Manchin and Republican Shelley Moore Capito, support the Appalachian Storage and Trading Hub.
At a budget hearing last week, Manchin pressed Energy Secretary Rick Perry about its progress.
“Are you all looking seriously at a natural gas storage hub in the mid-Atlantic region, and advancing that as quickly as we possibly can to have that backup for security? And how does that play into the national security of our country?” Manchin asked.
Perry said the hub was “not happening as fast as I’d like to see it,” but noted the Trump administration’s support.
“I think there is extraordinary potential in those four states and the Appalachian region – Pennsylvania, West Virginia, Kentucky, Ohio,” he said.
To bolster the argument that this development would improve national security, this week Manchin introduced a bill, the Appalachian Energy for National Security Act, which would task the Energy Department with studying the national security benefits of the proposed gas hub.
But for the protestors who picketed Tuesday, the fight isn’t over.
“We need to keep them from taking away what we have left,” said Ashley Funk, with the Mountain Watershed Association, an environmental group based Fayette County, Pennsylvania. “We must stand together from death alley to the Ohio River Valley to say to these companies that want to profit from our communities that we are not disposable.”
A new report fedeal report finds developing ethane storage in Appalachia could provide a boost for the entire petrochemical industry.
The report, asked for by members of Congress and released Tuesday by the U.S. Department of Energy, examined the feasibility of developing underground storage and distribution infrastructure for ethane, a natural gas liquid brought up during shale drilling and a key feedstock for most plastics.
The findings were praised by Energy Secretary Rick Perry, who added that the Trump administration also supports ethane storage in the region.
“There is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,” he said, in a press release. “As our report shows, there is sufficient global need, and enough regional resources, to help the U.S. gain a significant share of the global petrochemical market. The Trump Administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic production diversity.”
The Marcellus and Utica shale formations, located under West Virginia, Ohio and Pennsylvania, are ethane-rich, and the agency estimates the largest growth in natural gas liquids production is expected from this region.
“Ethane production in Appalachia is projected to continue its rapid growth in the coming years, reaching 640,000 barrels per day in 2025 – more than 20 times greater than regional ethane production in 2013,” the report states.
Developing a natural gas liquid storage “hub” is critical to growing the plastics and chemicals industries.
Some storage capacity is under development in the region.
Energy Storage Ventures LLC is developing the Mountaineer NGL Storage project. When completed, the project would store 2 million barrels of ethane, butane and propane in four underground salt caverns on a 200-acre site, about a mile north of Clarington, Ohio, on the Ohio River.
Another high-profile public-private natural gas liquid storage project is also in the works. The Appalachia Storage and Trading Hub cleared its first major hurdle earlier this year when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan.
Republican Sen. Shelly Moore Capito of West Virignia priased the report’s findings in a tweet.
“This is something I have long advocated for & something I believe could be a game-changer for #WV & our economy,” she wrote.
DOE said building underground storage and distribution in Appalachia could benefit the entire industry and offer a “competitive advantage,” in part because it would diversify where ethane is stored geographically.
Currently, the bulk of America’s petrochemical industry and 95 percent of ethane storage is located near the Gulf Coast, which makes it vulnerable to climate change and extreme weather events.
The report focused largely on the economic benefits of ethane storage and did not examine the environmental costs, or factor in how increased flooding across Appalachia due to climate change might affect ethane storage or a petrochemical system.
Environmental groups say ethane storage and any petrochemical industry buildout in the region jeopardizes the region’s air and water quality and would negatively impact public health.
