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Odebrecht considers major expansion in US with cracking plant

19th February 2014

Brazil’s Odebrecht group is evaluating building a major petrochemical complex in West Virginia, US, as part of an ambitious strategy to become a leading player in the industry

Brazil’s Odebrecht group is evaluating building a major petrochemical complex in West Virginia, US

The Odebrecht group has 15 diverse business units ranging from bio-energy, to offshore oil and gas, civil and industrial construction, and employing close to 190,000 workers worldwide.

Company representatives met senior state and local officials in Parkersburg, WV, in November to discuss a possible investment that could be between USD4bn to USD6bn to build an ethane cracker plant and associated facilities.

“We’re evaluating the potential of a complex in West Virginia,” David Peebles, vice-president Ascent, which stands for Appalachian Shale Cracker Enterprise, a company created by Odebrecht to deal with the project, says. The plant would produce a variety of products from ethane feedstock and will have off-take agreements with Braskem, the Odebrecht group’s petrochemical company.

The project is designed to take advantage of the rapid growth of the shale gas industry in the northeast of the US and the use of fracking drilling techniques to extract gas in the Marcellus and Utica shale regions.

Cracker plants break down complex elements into simpler products, for example separating ethane from natural gas. Polyethylene is a by-product of this process and a base chemical for widely used plastic products.

Responsibility for operating the plant will be decided during the third stage of the evaluation process, Peebles said. That is still some way ahead.

The company is clear about its own objectives. “We have a strategic plan that goes up to 2020, both for the group and Braskem. Our strategy with regards to petrochemicals is building a modern asset base in Brazil, Mexico and the United States. We have assets in Brazil and the US. We are already in Mexico and we’re looking at how we can improve our market share and services. We are doing the same thing for a new project in Brazil.

“We are building on our base, which you might call our asset base by responding to what we think will be long term market demands,” he adds.

He stresses that what the company is doing in the US is part of an overall strategy and should not be seen as a single project. “We have plants in the US for polypropylene. And now we’re evaluating polyethylene. It’s part of a strategy, not a single project focus,” he continues.

He also believes that a cracker plant in Parkersburg could act as a catalyst by providing feedstock for downstream manufacturing.

So when will there be a decision?

The company has been studying the project for two years and stages two and three of the FEL are likely to take at least another year and a half, possibly two years, “There are a lot of things that you learn in these mega projects. (And) you find that if you take the time to do (a proper evaluation) the execution is a lot better,” Peebles says.

The construction will take between 36 and 40 months, which would make between four and six years for the whole process including, commissioning, and bringing the plant online and delivery of the project.

The project’s realisation and the timing will depend on the evaluation, but the company is committed to expanding in the US as an integral part of its three-pronged strategy with Brazil and Mexico.

 

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