Marcellus Shale Business Planner

April 2 2012

The following list of potential projects in the Marcellus Shale/Appalachia region was compiled from recent media reports and press releases and is not intended to be definitive. Infrastructure plans and corporate schedules change frequently, so if you see something of interest below, we encourage you to double-check with the company/principals involved for the latest information.

Business is booming in the Marcellus Shale and surrounding Appalachia region. It seems hardly a week in 2012 has gone by without another major announcement involving plans for a new natural gas processing plant. To help contractors keep track, we’ve put together profiles of some of the larger projects announced thus far.

Ethane Crackers

After months of suspense, Shell announced March 15 that it has signed a land option agreement and will evaluate a site in Pennsylvania for a potential new petrochemical complex, including a new ethane cracker that would process Marcellus natural gas.

Shell had been considering several sites in Ohio, West Virginia and Pennsylvania, and each state spent several months wooing the petrochemical giant. In the end, Shell decided to sign an option for land owned by the Horsehead Corporation in Potter and Center Townships in Beaver County, near the town of Monaca, roughly 30 miles northwest of Pittsburgh. However, the site is very close to the borders of Ohio and West Virginia, so both states are still likely to see significant economic benefits if and when construction begins.

In addition to an ethane cracker, Shell said it is also considering building polyethylene (PE) and mono-ethylene glycol (MEG) units on the site.

However, Shell was careful to point out that it has not made a final decision. “This positive development marks another phase as Shell continues to assess the commercial feasibility of a petrochemical complex in the Appalachian region,” Shell said in a statement. “The next steps for this project include additional environmental analysis of the preferred Pennsylvania site, further engineering design studies, assessment of the local ethane supply, and continued evaluation of the economic viability of the project.”

But Shell isn’t the only company interested in building an ethane cracker in the area.

Aither Chemicals: Based in Charleston, West Virginia, Aither Chemicals is scouting sites and raising the funds to build an ethane cracker somewhere in western Pennsylvania, northern West Virginia or eastern Ohio. “Shell’s announcement proves that projects like this are viable here,” Aither CEO Leonard Dolhert told a West Virginia newspaper. “We are in the game.”

Aither is partnering with Pittsburgh-based Renewable Manufacturing Gateway (RMG), a nonprofit organization, to raise up to $750 million in capital over the next several years. “Aither’s technology uses a patent-pending catalytic cracking method instead of steam cracking to make ethylene,” RMG said in a release. “The advantages of Aither’s catalytic cracking technology (compared to steam cracking and other chemical processes) include: lower capital cost, lower operating cost, shorter time to commercial operation, better scalability, and an overall simpler process to produce higher-value products. In compliance with the principles of ‘green chemistry,’ clean catalytic cracking technology consumes 80 percent less energy than steam cracking technology, and produces 60 percent less [carbon dioxide] output.”

If it’s built, Aither estimates the cracker would create 2,000 construction jobs, 200 permanent direct jobs, and “several thousand” indirect jobs. An announcement regarding the location of the cracker is expected very shortly.

Invictus LLC: Created last fall by Richard Neely, a West Virginia lawyer and former state Supreme Court justice, Invictus has leased nearly 1,500 acres in the state’s Kanawha Valley region and is moving forward on ambitious plans to build a new ethane cracker there. The total cost is estimated to be between $1.5 billion and $3 billion, depending on the exact nature of the plant. Invictus is currently looking for capital investors.

Other Natural Gas Processing Plants

Ethane crackers aren’t the only hot topic in the Marcellus region; more conventional midstream processing capacity is also in great demand.

MarkWest Energy Partners: In January, MarkWest announced plans to expand its Marcellus presence by adding more than 600 million cubic feet per day of additional processing capacity and 140,000 barrels per day of incremental fractionation capacity. The company’s Majorsville, West Virginia facility will expand to include two new 200 mmcf/d processing trains, both expected to come online sometime in 2013. In addition, MarkWest plans to add new de-ethanization capacity at both Majorsville and its Houston, Pennsylvania fractionation and storage complex. A new large purity ethane pipeline between Majorsville and Houston will also be installed.

MarkWest is also active in the Utica Shale region. Last December it partnered with The Energy and Minerals Group (EMG) to develop “significant natural gas processing and NGL fractionation, transportation and marketing infrastructure” in eastern Ohio. Two new processing complexes will be built in Ohio’s Harrison and Monroe counties, and 100,000 barrels/day of fractionation, storage and marketing capacity will be added on in Harrison county.

Dominion Resources: Dominion is investing $500 million in a new natural gas processing and fractionation facility now under construction in Marshall County, West Virginia. Dominion CEO Thomas Farrell said in February that construction of the first phase of the 70-acre Natrium facility is progressing, and the plant is expected to be operational by December 2012. Once the first phase is completed, Natrium will be able to process 200 mmcf/day of natural gas.