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W.Va.’s odds to win gas cracker plant greatly improve

CHARLESTON, W.Va. -- Odds that West Virginia will land a billion-dollar natural gas cracker plant have improved dramatically from perhaps 500-to-1 a year ago, the executive director of the Chemical Alliance Zone told the legislative Joint Committee on Economic Development Monday.

"Now, I think it's 50-50, or maybe better," Kevin DiGregorio told legislators. "The tipping point was when Bayer said their sites are available."

Earlier this year, Bayer proposed its plant sites in Institute and New Martinsville as locations for the cracker plant, a massive facility that would convert ethane -- a byproduct of natural gas production -- into ethylene. Ethylene is the base chemical used to produce a variety of products, including plastic bottles and containers, clothing, paints and flooring.

Attracting a cracker plant would not only bring $1 billion to $3 billion in direct investment, but would create hundreds of good-paying jobs, and attract ancillary chemical processing facilities, he said.

One key issue is whether there are sufficient underground storage facilities near the sites to store ethane awaiting conversion to ethylene, and Commerce Secretary Keith Burdette announced Monday that the state Development Office has commissioned a survey by the engineering consulting firm of Parsons Brinkerhoff to catalog available storage space.

He said an initial report should be available in 45 days.

Burdette said he believes West Virginia has "some pretty good cards on the table" as it competes with Pennsylvania and Ohio to land at least one cracker plant.

"We have the best infrastructure, the best sites, and the best work force," he said. "We have a balanced budget. We have a surplus, and we have lowered taxes."

Despite running a massive budget deficit, the state of Ohio is offering $1.4 billion in incentives in hopes of attracting a cracker plant.

Burdette noted that the state of New York similarly offered significant financial incentives to try to get Macy's to locate a $150 million distribution center there -- but that facility is under construction near Martinsburg.

"I can assure you that New York threw a lot more cash at it than we did, but what turned it is the long-term costs," he said.

Burdette said Macy's executives determined that over the long term, it would be cheaper to operate the center in West Virginia.

Also, during the 2011 regular session, the Legislature passed a tax-incentive package in hopes of attracting a cracker plant, including a provision to allow the plant facilities to be assessed at salvage value for property taxes.

West Virginia has not had a cracker plant since a facility in Institute closed in the 1970s, DiGregorio said. At the time, new plants opened in the Gulf Coast and in Canada, where ethane was cheaper and more plentiful.

However, development of the Marcellus Shale gas field, which stretches from upstate New York, through western Pennsylvania and eastern Ohio and through much of West Virginia, makes the region again viable for cracker plants, DiGregorio said.

While there has been considerable debate over the potential adverse environmental impact of Marcellus Shale drilling, DiGregorio said cracker plants involve a "relatively benign" chemical process.

The process, which involves heating ethane under high pressure to more than 750 degrees Celsius to convert it to ethylene, releases carbon dioxide and water as byproducts.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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