Ethane cracker plant might be built in Institute
CHARLESTON, W.Va. -- South Charleston-based Aither Chemicals is expected to announce plans next week to build a $300 million ethane catalytic "cracker" plant that would employ up to 200 workers at the Institute Industrial Park by 2015, according to state officials and economic development leaders familiar with the deal.
Aither plans to partner with Bayer CropScience and MarkWest Energy on the cracker project. The petrochemical facility would convert ethane from the Marcellus Shale into ethylene, which is used to make plastics.
A news conference to announce the Institute cracker was scheduled initially for Monday, but might be pushed back to Wednesday.
"We are planning to have some kind of announcement Wednesday," Aither CEO Len Dolhert said Friday afternoon. "Things are in the works. There are moving components, and we need to get those things arranged."
The plant is expected to hire some employees being laid off from the Bayer CropScience facility at Institute. Last year, Bayer announced plans to shut down its methyl isocyanate, or MIC, production unit and cut 220 jobs. That move was prompted by Bayer's agreement with the U.S. Environmental Protection Agency in 2010 to phase out the pesticide aldicarb because of its health risks, especially to children.
Aither is expected to build the cracker plant in stages, starting with a smaller production facility at Institute. Full-scale production is expected to begin in 2015. The plant would generate about $500 million in annual sales.
Aither's announcement might help soothe state political and business leaders' disappointment over Shell Oil Co.'s decision this week to consider locating a multibillion-dollar cracker plant in Monaca, Pa. -- although the Aither facility would be significantly smaller than the proposed Shell cracker.
Shell picked the southwestern Pennsylvania site over, among other places, a location in West Virginia's Northern Panhandle.
In late January, Gov. Earl Ray Tomblin signed into law a tax incentive plan designed to lure a massive cracker plant to West Virginia. The legislation slashed property taxes for a company that builds an ethane cracking plant that costs $2 billion or more.
Aither plans to spend $300 million to $500 million to build the cracker in Institute, so the company wouldn't qualify under that tax incentive plan.
However, Dolhert said Aither would expect a similar tax break.
"We hope to get all the tax incentives afforded to any cracker," he said, "no matter the size."
Denver-based MarkWest Energy plans to supply ethane to Aither Chemicals' cracker in Institute. MarkWest gathers, processes and transports natural gas drilled by larger companies, such as Chesapeake Energy.
"It's a midstream company that handles everything on top of the ground," Dolhert said.
Dolhert said Aither's cracking process -- developed by Union Carbide Corp. decades ago -- is cheaper and cleaner than traditional steam cracking facilities like the one being built by Shell in Pennsylvania.
"It uses 80 percent less energy and provides 90 percent less carbon dioxide," Dolhert said. "It's a lower-cost process."
Aither's catalytic cracker project could attract other "downstream" companies -- those that use ethylene to manufacture plastics and other products -- to the Kanawha Valley.
Dolhert said Aither plans to build three cracker plants in the Appalachian region, and West Virginia's Northern Panhandle could be in the running for one of the others. The chemical company also is looking at sites in Aliquippa, Pa. -- near the proposed Shell cracker site -- and eastern Ohio for the additional petrochemical facilities.
Aither previously announced plans to spend $750 million for each cracker, but the company's investment at the Institute Industrial Park would be considerably less because Bayer CropScience already has equipment, piping and facilities at the site, Dolhert said.
"The cost depends on what you put in the place and whether the infrastructure is already in place," he said.
Aither is actively raising money for its proposed crackers.
The company recently secured $200,000 in financing from Renewable Manufacturing Gateway, a Pittsburgh-based investment group.
Last June, the West Virginia Jobs Investment Trust, the state's venture-capital agency, closed on a $250,000 loan with Aither. The loan's principal can be converted to stock.
In January, Innova Commercialization Group in Fairmont invested $200,000 in Aither through the West Virginia Capital Access Program, which uses federal stimulus funds to help small businesses.
"We're in the process of raising hundreds of millions of dollars," Dolhert said.
Aither, which currently has 10 employees, spun off from the Mid-Atlantic Technology, Research & Innovation and Research Center, or MATRIC, an organization located at the West Virginia Education, Research and Technology Park in South Charleston.
Reach Eric Eyre at email@example.com or 304-348-4869.