WV Invests $250K in Marcellus Ethane Processing Plant

The state of West Virginia is investing $250K in a company that turns ethane from Marcellus gas wells into ethylene. Think of it as a “mini-cracker plant”. Shell and other large energy companies are looking to establish large cracker plants in the Marcellus region—a chemical plant that will take over $1 billion to build (see this MDN story). In the meantime, smaller and leaner companies are providing some of the same kinds of service a cracker plant provides—at much less of an investment. Aither Chemicals is one of those companies.

A quick refresher on petrochemicals: Most of what comes out of a gas well is methane—what most people think of as natural gas. But there are other chemical compounds, called natural gas liquids, that are found in some gas wells. One of the compounds often found in Marcellus wells is ethane. Ethane can be processed, like what Aither Chemicals proposes to do with a new plant, into another compound called ethylene. Ethylene is the “feedstock” (or raw material) used to make most plastics, including polyethylene and PVC. Marcellus gas drilling is having a huge impact on the plastics market in the U.S. (see this MDN story).

The state’s venture capital fund is investing $250,000 in a company that plans to build plants and develop chemicals derived from ethane that comes from natural gas extracted from the Marcellus shale.

The West Virginia Jobs Investment Trust’s decision to invest in Aither Chemicals Limited Liability Co. was announced Thursday. Aither is a spin-off of the Mid-Atlantic Technology, Research and Innovation Center, known as MATRIC.

Keith Burdette, secretary of the state Department of Commerce and chairman of the Jobs Investment Trust, said in a prepared statement, "In Marcellus shale and the byproduct ethane gas, West Virginia has a natural resource with tremendous economic potential. Aither’s approach to convert ethane into petrochemicals will enhance our capability to develop this resource, retaining and creating jobs in the state."

Aither’s process is designed to work on a smaller scale with less start-up costs than traditional steam cracker plants, Burdette’s office said. Traditional plants typically cost $1 billion or more.

Leonard Dolhert, Aither’s chief executive officer, said, "With Aither as a local provider, West Virginia’s chemical companies will be able to reduce shipping costs."

Dolhert said the company’s immediate goal is to build an alliance of investors, of which the Jobs Investment Trust is key. Aither intends to repay the investment, with a good financial return, and create jobs at the same time, he said.*

*Charleston Daily Mail (Aug 12, 2011) – State fund invests in chemical company startup