Thailand Company to Invest $100M For Early Work on Ohio Ethane Cracker

Thailand’s state-owned petrochemical and refining company, PTT Global Chemical (PTTGC) pcl, said Thursday it would spend $100 million on engineering design work for a multi-billion dollar ethane cracker it has proposed to build in the heart of the Utica Shale in Southeast Ohio.

PTTGC CEO Supattanapong Punmeechaow was joined by Gov. John Kasich, local officials from Belmont County, where the company plans to build the facility, and top executives from the state’s economic development organization, JobsOhio, for a press conference at the statehouse to make the announcement.

PTTGC, a subsidiary of Thailand’s oil and gas company, PTT pcl, has signed contracts with a consortium of engineering firms that would conduct preliminary design work and cost estimates for the facility. The company has also signed a purchase option agreement for key properties in Mead Township along the Ohio River for the proposed site. A coal-fired plant operated by FirstEnergy Corp. was retired at the location in 2011.

Punmeechaow said it would take up to a year to determine the economic feasibility of the project and added that a final investment decision would not be made until 2016 or 2017.

In April, the company announced that it was interested in constructing a cracker at an undisclosed site in Belmont County (see Shale DailyApril 23). It has partnered with Japanese global services company Marubeni Corp. to develop the facility and has said it is searching for a third partner to help finance the project. In its first quarter earnings report, PTTGC said it would plan for a one million tonne facility that could cost nearly $6 billion to construct (see Shale DailyMay 19).

Kasich, a Republican presidential candidate, called the potential cracker the next step in establishing Ohio as a national energy hub. Punmeechaow said he has been impressed “with the Ohio business climate and with the prioritization of the shale energy industry,” adding that the company hopes to make the project a reality by next year. The cracker would convert locally sourced ethane from the Marcellus and Utica shales into ethylene, a key building block for plastics.

PTTGC’s proposal is one of four others that have been announced for the region (see Shale DailyMay 21, 2014Nov. 14, 2017Jan. 19, 2012June 7, 2011). None of those projects have broken ground. In April, the Brazilian construction firm Odebrecht SA and its petrochemical affiliate Braskem SA said plans for a similar ethane cracker in Wood County, WV, would be postponed pending further project analysis amid the commodities downturn. Those companies have already conducted engineering design work and filed for some necessary permits (see Shale DailyMay 19, 2014).

PTTGC has said it searched for nearly two years to identify a site for the facility in the Appalachian Basin. As a result of the spread between the price of oil and natural gas, the U.S. plastics industry is expected to grow rapidly over the next decade, according to a recent study released by the American Chemistry Council (see Shale DailyMay 19). Asian and European plastics producers typically use an oil-based feedstock rather than natural gas-based feedstocks. PTTGC has said the Ohio cracker could have cost advantages, especially in a region where demand is high for petrochemical products.

If the company goes forward with the project, it would take more than three years to construct and have a tentative in-service date of 2020.

Source : Natural Gas Intelligence (NGI)