The conversation about what to do with ethane produced in the Marcellus/Utica shales has switched from being seen as a hindrance in the play to representing a large opportunity for both midstream and petrochemical companies.

While there are various plans in place to build pipelines to transport ethane from the Marcellus and Utica shales to Sarnia, Canada, and the Gulf Coast on the midstream side, several petrochemical companies have announced plans to build world-scale ethylene crackers in the U.S. to handle this increased production.

An abundance of ethane in the region combined with lower costs for the product has given the U.S. petrochemical industry a decided cost advantage compared with much of the rest of the world. This has created the possibility that Marcellus ethane could be cracked in three locations – Sarnia, the Gulf Coast and the Northeast.

It wasn’t that long ago that the notion of building an ethane cracker in the Northeast, much less more than one, was considered a long-shot. But now, according to Leonard Dolhert, chief executive of Aither Chemicals, there is a very real chance of this happening.

Last year, Shell announced plans to build a world-scale ethane cracker in the region. While there is some skepticism as to whether a world-scale steam cracker will be built, others say Shell will soon announce the location for their cracker in the northeast in Ohio, Pennsylvania or West Virginia.

The project would take six or more years to be built and cost approximately $2 billion. In addition, the Gulf Coast and Sarnia have spare cracking capacity available, which made shipping to these regions especially attractive.

However, the chemical industry has a long history in the Northeast and there is now the possibility that Marcellus and Utica ethane production could lead to a petrochemical renaissance in the region.

Keeping this in mind, one of the more interesting announcements has come from Aither, a newly formed company in West Virginia that is planning to utilize catalytic cracking technology rather than steam cracking to build an ethane cracker in West Virginia, Pennsylvania or Ohio at a lower cost and scale.

“We have fantastic advantages with positive economics at a much smaller scale [than the steam crackers] as we’re targeting a $750 million plant size that can produce about 500 million pounds per year of ethylene. We can even build smaller than that if we want to. A lot of the skepticism for Marcellus ethane crackers comes from the humongous size, capital, project complexity and the amount of ethane that a single steam cracker would have to secure before it even starts to get built,” Dolhert told Midstream Monitor.

The patent-pending technology to be used on this project was developed to consume 80% less energy and produce 60% less CO2 than by steam crackers. The catalytic converter operates at a lower temperature, which allows it to consume less energy and slightly less physical space to a similarly-sized steam cracker. He added that this technology can be used to build a world-scale-sized cracker, too.

“Our process was brought to a commercial reactor tube scale and we’re scaling it up from there by increasing the number of reactor tubes. Our technology is a combination of the core catalytic processing step that was brought to scale by Union Carbide in the 1980s and process steps that are currently used in commercial production,” he said.

Aither Chemical is raising funds for the project along with Renewable Manufacturing Gateway (RMG), which is serving as the project manager for the facility. “We’re providing the CFO function for the venture. We’re surveying potential sites for the cracker and getting down to the nitty-gritty in terms of project management,” Jack Stein, a consultant at RMG, told Midstream Monitor. The companies are vetting multiple sources for project funding -- including some form of private equity, which has typically shied away from the petrochemical industry.

RMG has overseen the development and fundraising for projects all over the world, including electric power plants. “Aither is bringing the technology and technical experience to the project as my technical team is one of the best in the world in the chemical industry. RMG brings capital, natural gas and chemical product-related contract experience and project management experience. They complement Aither very nicely,” Dolhert said.

The conceptual differences between Aither/RMG’s catalytic cracker and the world-scale crackers being proposed by companies such as Shell don’t end in size and scope. Dolhert added that ethane production out of the Marcellus/Utica shales and the thirst for these volumes from the petrochemical industry is such that the region can handle multiple petrochemical plants rather than a single project.

“Marcellus production is enough to support four or more world-scale crackers, and with Utica production coming on there is room for multiple crackers in the region. Our scalability allows us to build not just one plant, but multiple plants in West Virginia, Pennsylvania and/or Ohio,” he said. The company does not have a timetable on where it would build the first of these facilities, but Dolhert stated that the decision will be within the year.

This decision will be based on multiple criteria, including the transportation of volumes into and out of the plant, a qualified labor force, and a friendly regulatory and business climate. “Fortunately, West Virginia, Pennsylvania and Ohio have all of these factors,” Dolhert said.

In addition, Aither Chemicals anticipates that its cracker would be eligible for any of the same incentives and tax breaks currently being offered to steam crackers in Pennsylvania, West Virginia and Ohio.

Contact the author, Frank Nieto, at fnieto@hartenergy.com