A newly formed company, Badlands NGL, has unveiled plans to build a $4 billion ethylene cracker and polyethylene complex in North Dakota that would tap into the hydrocarbon riches being extracted from shale in the state.
Badlands intends to build an ethane-based ethylene cracker as well as downstream polyethylene plants with 1.5 million metric tons of annual capacity by the end of 2017. The project would be a first for North Dakota, which aside from a couple of planned nitrogen fertilizer plants, has been left out of the chemicals boom enjoyed by the shale-rich Gulf Coast and Appalachian regions.
Unlike some shale formations, North Dakota’s Bakken formation mainly yields oil. Its output of oil has exploded from fewer than 200,000 barrels per day in 2007 to more than 1 million bbl this year, according to the U.S. Energy Information Administration.
However, vast quantities of methane, ethane, and other gases that come up with the oil have overwhelmed North Dakota’s limited infrastructure. By some estimates, nearly one-third of the gas is flared, a waste of roughly $100 million per month.
“This project is fully aligned with our goals to reduce flaring, add value to our energy resources right here in North Dakota, and create diverse job opportunities across the state,” North Dakota Gov. Jack Dalrymple said in announcing the project.
Stephen Lewandowski, senior director for olefins at the consulting firm IHS Chemical, has his doubts about the viability of making ethylene in North Dakota. “There is definitely a lot of gas, so the potential is there to build a cracker,” Lewandowski says. However, the isolated location and lack of chemical infrastructure present “big hurdles,” he notes.
Badlands may be a newcomer to the chemical industry, but its CEO William J. Gilliam isn’t. He led the petrochemical maker Rexene from 1988 until it went bankrupt in 1991. In 2009, Gilliam led a failed effort to buy and restart Rexene’s former complex in Odessa, Texas.
Gilliam tells C&EN he may establish a master limited partnership to help secure financing for the project. Badlands has a contract with the chemical distributor Vinmar to buy polyethylene from the complex if and when it opens.