Cracker trades jobs now for jobs someday, maybe - Beckley, Bluefield & Lewisburg News, Weather, Sports

Cracker trades jobs now for jobs someday, maybe

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Rob Cornelius Rob Cornelius
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Rob Cornelius of Parkersburg is a former energy columnist for The State Journal. Reach him at robcwv@gmail.com.

It's a gutsy call for a leader to host a press conference that promises thousands of jobs someday. Turn up the nervousness when you realize that your trophy ceremony includes the guarantee of lost jobs for over 100 folks in your state.

But that's what happened last week when Gov. (Earl Ray) Tomblin turned up in Parkersburg to announce a Brazilian company had an option to buy land that they someday might turn into an ethane cracker. … if they can find financing, infrastructure and a source of ethane.

As a bonus, that site's current 50-year tenant will close its plastics plant. 

Saudi Arabian-owned SABIC has had no luck dumping its facility at Washington, W.Va., so the 109 workers there will be out of gigs in 18 months or less.

So, while existing plants like SABIC and the adjacent DuPont facility have trouble finding buyers, is it reasonable to believe someone will invest billions in this Wood County river lot?

That's the jump in logic we in Wood County pray can happen.

You first heard about the possibility of a Braskem-related cracker on this page of The State Journal in February of 2012. From me. Look it up. It's been floating out there since the 2011 Special Election.

We'd love to have Oderbrecht build a massive atom-storage box that employs thousands.

But it's a heavy lift. The tort bar has cut millions out of the heart of DuPont here, as West Virginia's courts fell for medical monitoring in the C8 case. It's still a warning to outside businesses.

Originally, the biggest stumbling block for why West Virginia failed in the derby for the Shell cracker now in stasis in Pennsylvania was lack of appropriate land.

These Wood County properties have room: more than 500 acres at the proposed SABIC site; More than 1,200 acres next door at DuPont's Washington Works site; rail and barge access? Sure on both.

That seems to work. But they have to get actual ethane in here to run this thing. A true world-scale cracker, like Oderbrecht and Braskem are building right now in Mexico, would cook more than a million metric tons of ethane a year.

That's a lot of natural gas liquids. And there's no obvious pipeline that runs from the richest parts of the Marcellus in the Northern Panhandle downriver to Parkersburg. A 50- or 60-mile run of pipe up to Wetzel County is probably a good starting point. Not a big deal when you consider more than 1,000-mile pipeline runs to take our ethane to current processors in the Gulf of Mexico.

But one does begin to wonder why you'd build further down the Ohio River, when sites closer to the heart of the drilling action might be usable.

Even with all the recent bankruptcy drama and union strife at the Ormet Aluminum plant across the river from New Martinsville, one wonders why the nearly 1,200 acres under that company's control aren't available at a fire sale price. Eight hundred or so on the Ohio side, with another 400-plus owned or controlled in Proctor. Check their bankruptcy documents.

Bigger picture concerns are in the finance side.

There are at least a half-dozen other large cracker operations that were in process earlier this year for North America, according to Platts. The herd move to cracking ethane is a direct reaction to the upward world prices for the ethylene produced, combined with record supply and dropping price of ethane and all the natural gas liquids.

Will those conditions still be the case in seven or eight years if the Cracker Fairy comes to Wood County and gets this project done "on time"? That's unclear.

It's hard to spend billions based on projections of the future, no matter how unlimited our supplies of natural gas liquids appear to be.

Is it worth building a facility here, when the main competitive advantage will be a lower pipeline bill to get the source ethane to your cracker?

Finally, the very American phenomenon that is this gale of shale gas may be the very thing that stops a foreign investor like Oderbrecht/Braskem.

They do their business and accounting in Brazilian currency, the real. The real is down about 10 percent against the American dollar in just the last year.

The exploration, use and export sale of American oil and gas has managed to help strengthen our dollar, in spite of President's (Barack) Obama's economy. A stronger dollar is good for folks here.

But, the more this continues, the more expensive it is for outside nations to invest here.

Ten percent inflation, or its equivalent against the real, can put an end to this particular cracker story pretty quickly.