Proposed Ohio Cracker Plant Takes Step Forward With Storage Agreement

The developer of the proposed second petrochemical plant in the Appalachian Basin has reached a preliminary agreement with a natural gas liquids storage venture to provide storage for the ethane feedstock that will be used in production.

PTTGC and Energy Storage Ventures LLS have executed a precedent agreement for Energy Storage Ventures subsidiary Mountaineer NGL Storage to provide storage and transportation infrastructure for the project. A precedent agreement outlines the terms and conditions for the development of NGL storage in underground salt caverns on a 200-acre site in Monroe County, Ohio. The PTTGC plant would be located just about eight miles away on the Ohio River in Belmont County, Ohio.

Mountaineer would be the first underground NGL storage site in the Marcellus and Utica plays of Appalachia.

PTTGC, based in Thailand, suffered a setback recently when Daelim Chemical, a South Korean company, withdrew as an equity partner in the cracker plant. PTTGC said at the time it remained committed to the project and would seek a new partner. A final investment decision on the project, which has been in planning since 2014, was delayed until the end of this year or early next year due to the COVID-19 pandemic.

The $6 billion project, if undertaken, would be similar to the Shell cracker plant now being constructed in Beaver County. A cracker plant converts molecules of ethane, a natural gas byproduct, into ethylene and polyethylene, from which plastics, resins, solvents, and other industrial products are made.

A ready supply of ethane is a necessity for such a project, and the storage agreement would allow PTTCG to meet fluctuations in supply due to weather or other conditions with the stored feedstock. Ethane is a byproduct of the abundant natural gas produced in parts of the Marcellus and Utica basins.

The $250 million storage facility will be developed in two phases by creating multiple caverns in the existing underground salt formation, according to a joint statement. Each cavern will be capable of storing approximately 500,000 barrels of NGLs, including propane, butane, ethane, and ethylene. Mountaineer has obtained all required permits to begin construction of Phase 1 of the project – approximately 1.5 million barrels – which will take two to three years to complete. An additional 1.5 million barrels is planned for Phase 2, which will bring the total capacity to approximately 3 million barrels.

“Ethane storage and transportation will be a crucial element of a world-scale petrochemical complex,” said PTTGC President and CEO Toasaporn Boonyapipat in the statement.

“Mountaineer NGL Storage will provide essential infrastructure and capabilities to our project. Our impending partnership with this first-rate organization brings us one step closer to a final investment decision.”

“Our storage facility will have an important role in managing the plant’s supply portfolio, along with offering PTTGC and other prospective customers an option to manage seasonal and operational demand with competitive locally priced production,” said David Hooker, president of Mountaineer NGL Storage.

While the announcement of the storage agreement is a step forward, a recent study by the Institute for Energy Economics and Financial Analysis determined that the cracker plant project faces significant risks and said the financial outlook is dim. However, a recent report from the U.S. Department of Energy was bullish on the prospect of a buildout of the petrochemical industry in this region. The report found great potential for job creation and economic opportunity due to the abundant supply of low-cost natural gas if the public and private sectors must work together to address some challenges.