A potential petrochemical complex in Wood County could create more than 2,000 permanent jobs and a $2 billion impact on the region's economy in coming years, according to research released Tuesday.
Tom Witt, an economist and professor emeritus at West Virginia University, told lawmakers Tuesday the Mid-Ohio Valley is ripe for development and would be a suitable home for an ethane cracker in West Virginia.
However, he said state officials would need to be patient, as it won't be a quick or easy process.
"These things do not happen in one year, two years," Witt said. "It's something that develops over a period of time."
In November, Brazilian conglomerate Odebrecht announced it was exploring the possibility of building an ethylene cracker and three other polyethylene plants in Wood County. The potential multi-billion investment has been dubbed Project ASCENT, which stands for Appalachian Shale Cracker Enterprise.
State officials had long been trying to cut a deal to secure an in-state cracker plant -- a facility that "cracks" the ethane found in natural gas into simpler molecules that can then be used for manufacturing.
They had initially tried to convince Royal Dutch Shell to build a plant in the state, but they decided in 2011 to locate their potential facility in Pennsylvania. They have yet to formally commit to building that plant.
Witt studied the projected economic impact plants like the Odebrecht facility could have on the state's economy. He said the cracker and associated polyethylene plants would be a catalyst for more investment.
"One of these crackers could generate directly or indirectly ... over 2,000 jobs annually," Witt said. "But there's more to that. The polyethylene produced by these plants could produce other goods and services" such as film and sheet, saran wrap or other types of sheet plastics, injection molding and water bottles, just to name a few.
The cracker plant could pay out nearly $110 million in annual compensation to its employees. Other downstream plants could create an additional $280 million in annual output.
But Witt cautioned a couple of obstacles stand in the way of the West Virginia cracker's success.
Primarily, the pipeline infrastructure required to handle the projected volume of natural gas needed by the facility is lacking.
"We need to make sure we have the ethane pipeline in place," Witt said. "That will be a critical point. If we can't get the ethane from the point where it's fractionated to the ethane cracker, it won't work."
In Witt's hypothetical scenario, pipeline infrastructure could mean at least a $150 million investment.
Typically companies that operate ethane cracker plants do not operate pipelines and vice versa.
"It's a very specialized business," Witt said, noting pipelines are regulated by the Federal Energy Regulatory Commission.
Secondly, West Virginia lacks a workforce capable of staffing these specialized facilities.
Witt noted much has changed since the chemical industry ruled the Kanawha Valley and manual labor got the job done. Now, the focus is on robots and electronics.
"To make this a reality, we need to have new educational programs to train a skilled workforce," Witt said.
To accomplish that, Witt urged the state's community and technical colleges and vocational programs to establish curriculum focusing on the skills needed to work in the natural gas industry.
He said in order to attract a successful cracker plant to the region, West Virginia lawmakers need to be sensitive to the needs of different companies that may want to locate here. Otherwise, the companies could decide to build in Pennsylvania or Ohio.
"Although the economic impacts I indicated are for West Virginia, the plants for Pennsylvania and Ohio will have corresponding economic impacts," he said. "There's a lot of ethane building up out there and seeking a market. The best market for that is here in West Virginia."