The Dayton Daily News recently reported that Houston-based Enterprise Products Partners would begin expansion of the ATEX Express Pipeline in Ohio, Pennsylvania, West Virginia and Indiana. These types of projects will continue to come online in an effort to push natural gas liquids (NGL) from Southwest Pennsylvania, Ohio and West Virginia to the Gulf Coast and elsewhere, and it will be sure to change our landscape.
Most Pennsylvanians know NGL as "wet gas" - the liquids produced in association with methane. NGL production is growing by leaps and bounds in certain parts of the Marcellus and Utica shale plays. As industry analysts RBN Energy explain, NGL itself does not have much value until it undergoes fractionation - the process of separating NGL into its component parts - ethane, propane, butane, iso-butane, and methane (or pure natural gas).
Once LNG is broken down, the ethane component can be used as feedstock at an olefin or cracker facility to produce ethylene, a basic building block for making plastics. This is what Shell is considering for Beaver County. The other components can be shipped to various domestic and overseas markets, such as the growing Latin American market for propane.
If the NGL cannot be fractionated, production at the well head must stop - and that is not good for companies that invested millions of dollars to purchase gas reserves. For that reason there is a rush to rapidly ramp up fractionation capacity and construct pipelines to transport LNG and various components to market.
The Enterprise pipeline is being constructed to transport NGL to Texas. Sunoco/MarkWest are constructing the Mariner West pipeline to take NGL north to a fractionation complex in Sarnia, Ontario, which will eventually deliver products throughout Canada. The Mariner East Project will take NGL from Southwest Pennsylvania to Sunoco's processing facilities on the Delaware River, and from there products will ship overseas and to other markets.
In addition to pipelines, the major Midstream companies operating in Southwest PA (MarkWest, Dominion, Williams and Chesapeake) are constructing up to eleven fractionation facilities between Moundsville, WV and Houston, PA - less than 50 miles apart. At the same time, numerous expansion projects along the Gulf Coast are underway to increase fractionation and cracker capacity there.
These pipelines and fractionation facilities will enable NGL production from Marcellus and Utica shale to boom. According to Callie Mitchell, an RBN Energy analyst, NGL production in Southwest PA is poised to grow astronomically in the next five years - as shown on this graph - from 43 Mb/d (a meager 1.2% of US annual production) to an astounding 450 Mb/d by 2017.
Governor Corbett and others envision the processing of wet gas as a "second industrial revolution" that will "transform" all of Pennsylvania into a second Gulf Coast that doesn't just produce gas, but also processes it. In contrast, I recently heard an industry insider dismiss that vision as a "pipedream," explaining that it was much more convenient to enlarge existing facilities on the Gulf Coast, with their easy access to shipping ports and downstream markets, than to reconstruct Mont Belvieu, Texas along the Ohio River. Most likely it will be a blend - perhaps more a rowdy party than a revolution. We will see.
The Governor now does not expect to know whether Shell will build a cracker plant in Beaver County until sometime next year.
One thing is certain - wet gas will continue to change our landscape. This blog will continue to explore what those changes will mean for our communities and environment.
