CHARLESTON, W.Va. -- Chesapeake Energy's decision last week to sign a long-term contract to transport 75,000 barrels of ethane per day from the Appalachian shale region to the Texas Gulf Coast could jeopardize West Virginia's chances of getting a multibillion-dollar cracker plant, state Commerce Secretary Keith Burdette said.
"It's not a 'cracker-killer,' but this certainly doesn't help," Burdette told the Sunday Gazette-Mail. "The timing is bad, the message is bad, and we're disappointed."
Chesapeake said it doesn't expect the pipeline project to decrease West Virginia's chances of landing an ethane cracking facility.
Burdette said state officials are in "serious talks" with two companies looking to build crackers in West Virginia. He declined to name the firms.
Burdette had expected at least one of the companies to decide to build an ethane cracker here by the end of the year -- until Chesapeake announced its plans last week to ship ethane from the Marcellus and Utica shales out of West Virginia, Pennsylvania and Ohio.
Cracker plants convert ethane, a natural-gas liquid, into ethylene, the base material for a host of plastic products.
"We're very frustrated with Chesapeake," Burdette said. "Every barrel of ethane shipped out of West Virginia means less and less investment."
Burdette said Chesapeake executive Scott Rotruck, who sits on Gov.-elect Earl Ray Tomblin's Marcellus to Manufacturing Task Force, didn't notify state officials about Chesapeake's plans to ship the ethane out of West Virginia and neighboring states.
He said state officials have included Chesapeake in numerous meetings about luring an ethane cracker plant to West Virginia, and Chesapeake executives have taken part in discussions with the two companies interested in building cracker facilities in West Virginia.
Burdette said he found out about Chesapeake's decision last week, when reading the company's news release.
"The fact they didn't tell us about this was very disheartening," Burdette said. "It doesn't send a very good message that this is a two-way partnership. They knew how important we feel recruitment of a cracker is to West Virginia."
Rotruck said the pipeline project actually could help West Virginia's chances of recruiting a cracker plant to the state. Ethane supplies "should remain significant" in the region, he said.
Sites under consideration for the cracker plant include Bayer-owned properties in New Martinsville and Institute.
"This announcement should not preclude our state's ability to attract an ethane cracking facility," said Rotruck, Chesapeake's vice president of corporate development. "It will help ensure robust Marcellus development, which must be demonstrated in order to build a cracker.
"Proper ethane management will be a multi-tiered solution, with possibilities for storage, pipeline and cracking facilities."