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Chemical Plants Capitalize on Natural Gas

February 21, 2011

MOUNDSVILLE - PPG Industries and Bayer MaterialScience have played a major role in the Upper Ohio Valley's industrial base for years. Executives at both chemical plants said their companies intend to continue operations well into the future.

That statement is subject to scrutiny, however, as both plants have experienced cutbacks and production changes over the past decade. Both Bayer and PPG are banking on the Marcellus Shale natural gas boom to play a big role in the future, as a byproduct of natural gas - ethylene - has the potential to help bolster their bottom lines.

Bayer is known to be in the market for a natural gas "ethane cracker" facility, which would convert ethane - a component of natural gas found in the local area - to ethylene, which is used to make plastic. Bayer and PPG use ethylene to help make their products.

If such a facility were to locate here, it could mean hundreds, if not thousands, of new jobs, and also help boost the chemical industry by cutting what it pays currently to receive ethylene.

PPG Industries Chief Executive Officer Charles Bunch also noted his company is talking with natural gas suppliers in the hopes of locking in fuel costs at low prices.

PPG already has entered into an agreement with Dominion Transmission to locate a natural gas liquids processing plant on property adjacent to the Natrium plant.

Fact Box

What is the current state of the area's chemical industry?

The area's chemical plants - namely Bayer MaterialScience and PPG Industries - continue to provide jobs for about 800 local families and pay millions in local and state taxes each year. High costs and cheaper overseas production make the two plants vulnerable to the new global economy, however. Bayer has experienced a steady decline in employment and production over the past decade, while PPG has fought labor issues. Both companies are hoping to capitalize on the current natural gas boom, as PPG already has partnered with Dominion Transmission to build a natural gas liquids processing facility adjacent to the Natrium site, with Bayer also looking for a partner. The hope for both companies is that a natural gas "cracker" facility will locate here, which means that the ethane formed from natural gas liquids could be processed into ethylene, which is a product used in the manufacture of plastics.

Along with the natural gas finds, PPG Natrium Works Manager Jim Rock said things are going well at his plant.

Rock said PPG Natrium currently employs more than 500 workers. The plant's annual payroll is approximately $40 million, and it spends about $50 million in the local tri-state area on supplies, raw materials and services, as well as another $55 million in energy, including purchased power and coal. The company pays annual local and state taxes of about $3 million.

The plant, which began operations in July 1943, makes chlor-alkali and derivatives, primarily chlorine and caustic soda and is part of PPG's Commodity Chemicals segment.

"We began 2010 with continued uncertainty about the recovery of our markets, but as in 2009, our employment remained stable," Rock said. "In fact, we were able to invest $10 million in capital improvements and recently doubled our capacity of a key product. In addition, the plant's calcium hypochlorite unit, which produces water treatment products, set record results."

Overall volumes, however, remain below pre-recession levels, although PPG's Commodity Chemicals segment, which includes the Natrium plant, in 2010 earned $1.4 billion in sales.

"In addition, it was recently announced that Dominion Transmission has selected our site to locate a future gas fractionation plant. Both of these were exciting developments during the year and affirmed our commitment to the sustainability of this site and the area's economy," he continued.

"We recorded our best-ever safety performance during the year thanks to a diverse array of processes and practices. Looking ahead in 2011, we expect difficult economic conditions to continue, and as a result, we will remain focused on controlling our costs while serving our customers. We will also continue to maintain the safest plant possible, protecting both our employees and the community."

Rock said PPG Natrium has a family atmosphere, as generations of local workers have filled the ranks.

"In our plant population, you will see generations of people who have worked here in the nearly 70 years we've been in operation,'' Rock said, "There is such a great relationship between the plant and the community where we both depend upon each other, and I don't think that will ever change.

"We expect the global economy to strengthen and broaden in 2011, and this should be positive news for us at Natrium.

"We also anticipate that the natural gas resources within the Marcellus Shale will play a role in bolstering the local economy and providing a source of reliable, less expensive key raw material for PPG and for many other industries in the Ohio Valley."

At Bayer MaterialScience LLC, General Plant Manager Jeffrey Bolton also remains optimistic about the future of the New Martinsville Industrial Park in Marshall County, which covers 1,000 acres on the Ohio River, of which 90 acres are available for immediate occupation.

The industrial park is located on Bayer's property along W.Va. 2 at Proctor.

"We are proud of our people and our site, and remain confident in a successful future as we continue to pursue third party tenants to share our industrial park. I remain optimistic about the future of the plant," he said.

According to Bolton, the New Martinsville site offers prime manufacturing space with "exceptional" infrastructure and site services as well as access to key markets and quality road, rail and river transportation.

He also cited a motivated, skilled work force with documented world class safety and environment performance.

"We have a skilled, experienced, motivated work force that achieves exceptional safety and environmental performance, of which we are understandably proud," Bolton said.

"To third-party tenants who want to share our industrial park, we offer exceptional infrastructure and site services and access to key markets in the Northeast and Midwest, plus quality road, rail and river transportation," Bolton added.

"For example, we have indicated that the New Martinsville Industrial Park might be the ideal location for a company to build a thermal cracker to take advantage of the natural gas reserves in the Marcellus Shale field," Bolton said.

Bayer MaterialScience LLC manufactures a range of polyurethanes, which are the raw materials used in the automobile, furniture and construction industries, plus Texin thermoplastic polyurethane, which is used in the automobile, tool, sporting goods and medical industries. The New Martinsville plant currently employs about 300 workers.

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