Friday, December 16, 2011

Natural-gas boom may create basic chemical manufacturing renaissance in Appalachia

Officials in Appalachian states are hoping the natural-gas boom will attract more than just controversy to their economically struggling region. Pennsylvania, Ohio and West Virginia are offering tax breaks and incentives to "ethane crackers," or the multi-billion dollar plants that start the chain of making ethylene, a basic feedstock for chemical plants, reports Gabriel Nelson of Energy and Environment News.

No ethane cracker has been built in the U.S. since 2001 because natural-gas prices were too high, and most production was sent overseas. Since new deposits, such as those in the Marcellus Shale, have been tapped, crackers are now cheaper in the U.S. than anywhere except the Middle East. The U.S. ethane supply has grown by 25 percent over 10 years, and because it's harder to transport than methane, cracking plants must be located close to drilling sites. Nelson reports if ethane supplies stay at current levels, petrochemical companies will spend over $16 billion on pipelines and crackers.

However, the threat of new gas-industry regulations has companies worried. They've warned anything that makes gas production more expensive will threaten construction of crackers. Nelson reports the industry is lobbying against regulations, including those against hydraulic fracturing, as environmentalists and public health groups are calling for more rules to protect human health and water supplies. (Read more)

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