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Ethane cracker could find home in Wood County

Tom Hindman
Gov. Earl Ray Tomblin, flanked by Odebrecht Environmental CEO Fernanco Santos-Rios, left, and business development vice president David Peebles, announces details of the Brazilian conglomerate's Project ASCENT, which will explore the possibility of constructing an ethylene cracker, three polyethylene plants and other facilities at Washington Bottom in Wood County.
Tom Hindman Gov. Earl Ray Tomblin and Odebrecht announced that Odebrecht will explore the development of a new petrochemical complex in Wood County. The complex, Ascent -- Appalachian Shale Cracker Enterprise - ? would include an ethane cracker, three polyethylene plants, and associated infrastructure for water treatment and energy co-generation.
Tom Hindman Odebrecht, an international company that employs nearly 180,000 people through its worldwide subsidiaries, hopes to build its new plants at the site of the current SABIC Innovative Plastics plant. SABIC informed its 109 production employees Thursday that it will cease production within 18 months.

PARKERSBURG, W.Va.--Brazilian conglomerate Odebrecht could spend billions of dollars -- and create an untold number of jobs -- to build a massive petrochemical complex in Wood County in coming years, part of an economic development plan announced Thursday by Gov. Earl Ray Tomblin.

Odebrecht unveiled details of Project ASCENT, which stands for Appalachian Shale Cracker Enterprise. The project will explore the possibility of constructing an ethylene cracker plant, three separate polyethylene plastic resin plants and additional facilities for water treatment and energy generation in the Washington Bottom area of Wood County.

The company has been discussing the project with state officials for nearly two years, but it wasn't until Thursday that executives decided to go public with the news.

Tomblin, who has made attracting a new petrochemical plant to the state a top priority since taking over the governor's office three years ago, was ebullient while announcing the project's details at an afternoon press conference at West Virginia University at Parkersburg.

"Today, without question, is one of my proudest moments," Tomblin said. "This announcement is a defining moment in the economic development of the Mountain State and in our region's history."

The project is still in its infancy. There is a significant amount of engineering, permitting and financing work that must be done over the next few years before it gets a final approval for construction.

However, state Commerce Secretary Keith Burdette said he and Tomblin are "very confident" Odebrecht will follow through with final construction.

Should that happen, Burdette said the project could completely reshape the state's manufacturing economy. 

"It represents the largest single industrial project in the history of the state of West Virginia," he said. "If we can make all the pieces come together -- and I'm confident we can -- it will mean not just a plant, but it will drive other plants.

"If we do this right, this will impact our economy for a half century or longer," he said.

Polymer Alliance Zone President Karen Facemyer said the announcement is "incredible proof that the shale gas boom in West Virginia is driving a renaissance of the North American plastics and manufacturing industries."

West Virginia Manufacturers Association President Rebecca McPhail Randolph said Project ASCENT will help the state maintain its existing manufacturing base and attract new companies as well. 

"The sky is the limit for the future of manufacturing in West Virginia," Randolph said.

Odebrecht officials expressed cautious optimism about the project during the press conference. However, they were deliberately very light on its details.

How many jobs will it create?

"A lot," said David Peebles, Odebrecht's vice president of business development and director of Project ASCENT.

How much money would they spend on construction?

"A large amount of money," Peebles said.

When will they break ground?

"We do not want to give a specific date for a groundbreaking," Peebles said.

Peebles said the company is using the front-end loading, or FEL, method of project planning. The process, commonly used for long-term, capital intensive projects, is very thorough and involves three stages: FEL 1, FEL 2 and FEL 3.

The company has completed most of the FEL 1 stage, which just evaluates the overall scope of the project. Officials now plan to move into the FEL 2 stage, where preliminary engineering, land and design work is completed.

Peebles said officials won't know the project's cost, overall employment or how long construction will last until they have completed the three phases. Until that time, the company does not want to comment publicly about potential project details.

"We're not trying to be evasive, but we do not want to exaggerate and overestimate and have people's expectations raised," Peebles said.

"This is a deliberative process," he said. "We have purposely over the last couple years decided to have a low profile, to not make public announcements, but today we thought it was the time."

The company's low-profile decision stands in stark contrast to that of Shell Co., which announced two years ago that it would build a multi-billion-dollar cracker plant in Beaver County, Pa.

Two years after the highly touted Pennsylvania investment announcement -- made much to the chagrin of Tomblin and other state officials -- Shell has warned it may have to abort the project because of sagging profits.

Peebles said Odebrecht wants to make sure it does everything it can to avoid getting ahead of itself.  

 "We are not going to jump into a pool without knowing how deep the water is," he said.

"You will find that we are conservative, just as the governor is conservative, the state is conservative -- that's much better than running around like a chicken with your head cut off making announcements."

Odebrecht Environmental CEO Fernando Santos-Reis said the company has an option to purchase the land currently owned by SABIC Innovative Plastics.

He said Odebrecht plans to move forward with the purchase of the site during the upcoming FEL 2 phase.

Burdette said SABIC, owned by the Saudi Basic Industries Corp., told its 109 employees Thursday morning it intends to cease production at the former BorgWarner and GE Plastics plant within 18 months.

Burdette said half the employees will be able to retire from SABIC, while he hoped the other half would be able to find new jobs with Project ASCENT.

Another feature that sets the Odebrecht cracker decision apart from the Shell decision: West Virginia officials did not have to lure the company with any special tax incentives.

Pennsylvania officials offered Shell a tax incentive package that has been valued around $1.65 billion.

Burdette said Odebrecht officials haven't even discussed tax or development incentives with state officials yet.

"The really impressive thing about today's announcement is that we've really not got to that discussion," he said. They're making this announcement today based upon what they know -- not what they may need or what we may have to help with, but what they know today."

Reis said the company has paid attention to the fact that West Virginia has lowered its corporate taxes and workers' compensation reforms in recent years and has adequate cash reserves in its Rainy Day and unemployment compensation funds.

"We do find West Virginia with a very stable economy," he said. "We see a very stable environment for such a kind of investment."

Peebles also cited the relationship the company has with Tomblin, who met with Odebrecht officials during his 13-day European investment mission last month.

When asked what led Odebrecht to announce its decision, Peebles replied, "Because you have a great governor."

"I'm dead serious," he said. "And (it's) because he has an extraordinary staff and the collaboration that they have shown in working through, step-by-step, issues that we needed to understand."

Tomblin said the Odebrecht decision was another sign of vindication for the state's conservative fiscal management and tax reform policies in recent years.

"All these things have turned heads," he said. "We've shown the world that West Virginia is the right place to make their investments and that the Mountain State is a great place to do business."

Contact writer Jared Hunt at business@dailymailwv.com or 304-348-4836.

 


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