Williams Sells Gulf Coast Cracker Plant to NOVA Chemicals

Williams Geismar Olefins facility – click for larger version

Midstream giant Williams has been on a mission to make the company economically stronger AND produce cash that can be used for various purposes. In August, Williams announced they would sell their Canadian assets for $1 billion (see Bold Move – Williams Selling Canadian Assets). In September, Williams announced another potential asset sale–the company’s 88.5% ownership interest in the Geismar, Louisiana olefins petrochemical plant (see Williams Considers Selling its Gulf Coast Ethane Cracker Plant). The Geismar olefins plant is an ethane cracker by another name. It uses either ethane or propane and chemically “cracks” it into ethylene and propylene–raw plastics used by manufacturers. What does the Geismar plant have to do with the Marcellus/Utica? Directly, not much. There may be some Marcellus/Utica ethane flowing to that plant for processing, although we haven’t heard that. We’re interested in the story because Williams is one of the major midstream companies operating in our region. Anything that affects the company and its ability to continue operating, including asset sales in other regions, interests us. So it was with keen interest that we noticed Williams has now done the deal. They’ve agreed to sell the Geismar plant to Canada-based NOVA Chemicals, for $2.1 billion. Williams plans to use the money from the sale to pay down debt and fund capital investments…
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Canadian Cracker Eyes Utica Ethane, Adding $2B Polyethylene Plant

Corunna cracker site
NOVA Chemicals Corunna cracker site – click for larger version

Shell recently committed to building a “world class” ethane cracker in Butler County, PA, outside of Pittsburgh (see Breaking: Shell Pulls the Trigger, PA Ethane Cracker is a Go!). And as we mention in a companion story today, there are two more ethane crackers likely to be built–in Ohio and West Virginia (see Event Speakers Say More Crackers on the Way in the Northeast). With all of the cracker excitement, it’s easy to forget there’s already cracker plants processing Marcellus/Utica ethane–in the Gulf Coast and in Canada. Waaaay back in 2011 NOVA Chemicals signed a couple of agreements with Marcellus drillers to get ethane to feed their Ontario-based Corunna cracker plant (see NOVA Chemicals Signs Second Agreement for Marcellus Ethane to Feed its Corunna Cracker Plant). Marcellus ethane began flowing to the Corunna plant in July 2013 (see Big News: Marcellus Ethane Now Exporting to Canada Cracker Plant). In 2014 NOVA announced when the UTOPIA pipeline project is done, the Corunna plant will begin to take in Utica Shale ethane as well (see Canadian NOVA Chemicals to Ship Utica Ethane via UTOPIA). In March of this year, NOVA announced a $400 million upgrade on the way to the Corunna plant so it can handle even more Marcellus, and Utica, ethane (see Canadian Cracker Gets $400M Upgrade to Handle More Marc. Ethane). That upgrade will take 4-5 years. The new news is that NOVA is now planning to build a new world-class polyethylene facility near the Corunna cracker, and they’ll spend $1-$2 billion to do it. Behold the awesome economic impact of a cracker…
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Canadian Cracker Gets $400M Upgrade to Handle More Marc. Ethane

Nova Chemicals’ Corunna (Ontario, Canada) cracker plant is in for a $400 million makeover to convert the plant into using 100% ethane feedstock. The project will also invest in a second pipeline to feed ethane from the Marcellus/Utica to the plant. Nova’s board of directors recently approved the investment and work is scheduled for 2017/2018. This is good news for Marcellus/Utica drillers who are waiting (seems like FOREVER) for a regional ethane cracker plant to get built somewhere in the northeast. Even if one of the three major (and one minor) cracker plants is green lighted for the Marcellus/Utica, will will take 4-5 years to build it. In the meantime, if they can contract pipeline space, drillers can send their ethane to nearby Corunna cracker plant–so this is good news indeed. Here’s the details…
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Canadian NOVA Chemicals to Ship Utica Ethane via UTOPIA

In December, midstream company Kinder Morgan announced they would build a 210-mile, 10-inch natural gas liquids (NGL) pipeline that will carry Utica ethane and propane from Harrison County, OH, to Riga, MI. From Riga, the NGLs will hitch a ride via the KM Cochin Pipeline east to Windsor, Ontario, Canada (see UTOPIA is Coming! The UTOPIA Pipeline, that is…). Earlier this month MDN told you that UTOPIA launched an open season to sign up customers for the pipeline (see UTOPIA Open Season Begins Today – OH to MI NGL Pipeline). Not surprisingly, Kinder has just announced that NOVA Chemicals, owner of the Corunna ethane cracker plant in Ontario, has signed up as one of Kinder’s main customers for UTOPIA. We did, however, notice a few interesting things about this latest announcement…
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NOVA Visits Pittsburgh, Takes About Sarnia Cracker Expansion

Last December MDN brought you the news that NOVA Chemicals, which operates the Corunna ethane cracker plant in Sarnia, Ontario (Canada) plans to expand their cracker plant using more Marcellus and Utica Shale ethane (see NOVA Chemicals Plans Expansion of Corunna Cracker in Sarnia). At that time NOVA said they will expand capacity by an additional 20% gradually between 2014 and 2018.

At a special event in Pittsburgh designed to strengthen the already-strong connection between Pennsylvania and Canada, called Pop-Up Canada, NOVA vice president John Hotz provided a few more details about NOVA’s plans for the Corunna cracker plant…
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Why Wait for a Cracker to be Built? Canadian Plant Cracking Now

Although both WV and PA are in a race to build the northeast’s first ethane cracker plant, such a plant will not be operational for at least another 4-5 years–if all goes well. The problem is, what do you do with all of the ethane being produced now in the Marcellus and Utica Shale? Ethane is a valuable commodity that can be sold for a lot more than regular methane (or “dry gas”)–unless there’s no way to get it to a cracker. Then ethane becomes a waste product and actually costs money. The three ways to deal with ethane in the northeast right now are: (1) blend it with methane and other hydrocarbons, (2) flare it, i.e. burn it off, or (3) ship it out of the northeast via pipeline to a cracker plant. Option #3 is, of course, the preferred option for drillers–and an option that is now, as of a few months ago, a reality.

Although ethane has been flowing through the Mariner West pipeline (owned and operated by Sunoco Logistics) to the Corunna cracker plant in Sarnia, Ontario, Canada for the past few months, it has only been fully operational for a short time. Last Thursday, officials at the Corunna plant held a ceremony to commemorate full operation of receiving and processing Marcellus and Utica Shale ethane at the plant…
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NOVA Chemicals Plans Expansion of Corunna Cracker in Sarnia

If the ethane produced in the Utica and Marcellus region doesn’t get processed in our region by way of an ethane cracker plant–and it won’t for at least another five years, even if a plant is green lighted today–it has to go somewhere else to be processed. That somewhere else is either the Gulf Coast or Canada, where large cracker plants are located. One of those crackers is operated by NOVA Chemicals in Sarnia, Ontario, Canada. Yesterday NOVA issued a press release that talks about their plans to expand the Corunna cracker to handle an additional 20% capacity coming from the Utica/Marcellus, which is good news for producers in the northeast.

NOVA is also planning to expand the manufacturing facilities that accept the output of the Corunna cracker, including a plant that manufactures polyethylene. Here’s the NOVA announcement from yesterday about what’s coming in the next few years in Sarnia…
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Range Sending Natural Gas Liquids to Canadian Cracker Plant

Range Resources is not waiting for a new multi-billion dollar cracker plant to be built in the Marcellus region to process the natural gas liquids they’re producing in the region. Instead, Range is going to send its natural gas liquids to Canada for cracking. Natural gas liquids contain ethane which can be processed or “cracked” to produce ethylene, a raw material used to make plastics.

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Range Resources to Sell Ethane to Canadian Chemical Company

Range Resources, one of the largest drillers in the Marcellus Shale, will provide ethane to Canadian chemical company NOVA Chemicals. Methane is the primary compound that is “mined” during gas drilling, but ethane is also one of the compounds produced when drilling. And ethane is used by chemical companies as a “feedstock” or raw material to make plastics. For more background, see this MDN story.

From the company issued press release:

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