Yes, Christmas has come and gone, but at the West Virginia Department of Commerce, the countdown to a different kind of Christmas continues.
Commerce Secretary Keith Burdette says it’s just a matter of weeks before one of the two multi-national companies planning to build a giant $2 billion ethane cracker decides on a site.
This region is loaded with natural gas in the Marcellus and Utica Shale. Now, with the development of horizontal drilling and the use of hydraulic fracturing, drillers can tap the previously unreachable deposits.
Burdette says the companies have narrowed a list of 40 possible sites down to just a few locations in West Virginia, Ohio and Pennsylvania.
A cracker would take natural gas and process it into petrochemicals used in the production of plastics. Burdette says plant construction would create up to 10,000 jobs. Hundreds more workers would be employed after the plant is built, and there will be more jobs with the expected downstream industries.
This could be—and I’m not exaggerating—the biggest economic development for the state in a generation.
But will it happen?
Burdette said the chances are better than 50/50. We know that Royal Dutch Shell is one of the players. The other is believed to be Braskem, a Brazilin company. Shell says it expects to make announcement an within weeks. Braskem isn’t saying anything.
Burdette says the first, and most basic, need for a project of this magnitude is between 200 and 500 acres of flat land that’s near a railroad, a navigable river and a major highway. Frankly, that’s not easy to find in West Virginia. Fortunately, there are a couple of potential sites along the Ohio River that would work.
West Virginia has tried to sweeten the deal by giving the company that builds the cracker a substantial break on its property taxes. I’m always skeptical of the government picking economic winners and losers, but a project of this significance does make one question the importance of philosophical consistency.
It’s not just the multi-nationals who want to build a cracker here. Former state Supreme Court Justice Richard Neely isn’t waiting for a big corporation to make its decision. Neely has created a company that he says plans to build a cracker near Montgomery, in Fayette County.
The natural gas boom has shifted the energy dynamic in this country. The dramatic increase in production has driven down prices, and that’s good for the consumer, but companies are still investing in the industry.
“The cheap gas makes the U.S. dramatically more competitive as a place to produce petrochemicals used in plastics and a variety of other products,” said the Wall Street Journal this week.
Meanwhile, West Virginia took a critical step earlier this month toward providing regulatory certainty when the Legislature passed the Marcellus Shale bill. Drillers now know going forward what the rules are going to be.
Contrast that with Pennsylvania, where lawmakers have not been able to agree on fees and regulations for Marcellus Shale drilling. “Uncertainty is a wet blanket on long-term investment decisions,” said Marcellus Shale Coalition spokesman Travis Windle.
It’s an accident of nature that West Virginia is sitting on top of an energy source that’s 400 million years old. But what happens with it now is no accident. If we get this right it could forever change the course of our state.