Brazilian petrochemical producer Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia, and is seeking to sell the land that would have housed it, the company confirmed Thursday.
"Due to a number of recent inquiries about its site in Parkersburg, Braskem has engaged a financial advisor to help evaluate strategic alternatives for the site," the company said, declining further comment.
Andy Malinoski, spokesman for the West Virginia Department of Commerce, repeated the same statement in response to a request for comment from Mike Graney, director of the West Virginia Development office, who told a group of lawmakers in the state this week that Braskem had agreed not to build the complex and was quietly marketing the property.
The decision is the latest reversal seen by proponents of the Appalachian Basin region's natural gas industry, who are seeking to attract international investment in the energy and petrochemical industries to the Mountain State.
The project, announced in 2013, has been on Braskem's back burner for several years.
In May last year Mark Nikolich, CEO of Braskem's US arm, Braskem America, said the project remained on hold pending progress on infrastructure, such as pipelines. The company had not found the right risk profile by that time, he said last year.
Since then, Braskem has faced multiple other challenges. The company is facing fallout from a government report that linked its salt mining operations in Brazil to geological damages, leading to one cash freeze of R$3.7 billion ($973 million) and a lawsuit seeking a second freeze of R$2.5 billion ($657 million).
In addition, early last month LyondellBasell said it ended talks to acquire Brazilian construction conglomerate Odebrecht's 38.3% share in Braskem in a deal that market participants said could reach a value of $11 billion.
Braskem's failure to file a required annual report for 2017 with the US Securities and Exchange Commission on time and uncertainty about an extension of a naphtha supply contract with Braskem co-owner Petrobras were among issues that held up a conclusion for more than a year, market sources said. Odebrecht has since filed for bankruptcy protection.
DECISION DISAPPOINTING, BUT NOT UNANTICIPATED
Greg Kozera, marketing director of Shale Crescent USA, said the Braskem decision was disappointing, but not unanticipated.
"It is what it is, so we'll deal it," he said. "Our hope will be that someone will pick up that property and do something good with it." Shale Crescent USA is promoting the creation of a petrochemical manufacturing and storage industry within the region of Appalachia where the states of Pennsylvania, Ohio and West Virginia meet.
Charlie Burd, the executive director of the Independent Oil and Gas Association of West Virginia, agreed, saying he was glad to hear that the proposed site would be made available for other industry players to bid on. "Hopefully they will utilize the natural gas and downstream products produced here," he said Thursday.
Shell is building a new petrochemical complex in western Pennsylvania slated to start up in phases from 2021 through 2022, and PTTGC America and Daelim are planning a complex in southeastern Ohio, though they have yet to make a final investment decision to move ahead.
Most of the more than $200 billion in new US petrochemical infrastructure to emerge from the domestic natural gas shale boom is located along the US Gulf Coast, but the Shell's project will be the first to be located in the heart of major US Northeast gas shale plays.
In a related development, West Virginia officials still are waiting for China Energy to make good on a promise the company made in November 2017 to invest up to $83.7 billion in shale gas development and chemical manufacturing in West Virginia over a 10-year period. That proposed investment, contained in a memorandum of understanding signed by the company and state officials during a visit by President Trump to Beijing, has been put on hold likely as a result of the trade war between the two nations.
