Big News: Marcellus Ethane Now Exporting to Canada Cracker Plant x Bookmark Every now and again you come across a big, fat gold nugget of news in a press release. That happened for MDN today when we read yesterday’s press release from Range Resources, innocently announcing their second quarter 2013 results (see today’s story about Range). The gold nugget? Range reports that on July 21st their first deliveries of ethane via the Mariner West pipeline were made to Sarnia, Ontario, Canada. This is the first time ethane has made it to a processing (cracker) plant. The little nugget of gold from Range, the only Marcellus driller (so far) to sell ethane… The first deliveries of ethane into Mariner West to Sarnia, Canada commenced start up operations on July 21st. Range has access to the only operating de-ethanizer in Appalachia while others are still under construction. This will allow us to continue our planned growth without concern for pipeline quality requirements. Additional ethane and propane transportation projects are scheduled to become operational next year conforming to our growth plans. Brief background Until now, Marcellus and Utica ethane has been treated as a waste product by drillers–disposed of by flaring (burning it) or mixing it with other compounds in order to get rid of it. The only practical way to ship ethane over a distance is via pipeline–which is why there’s been such a push to build pipelines for it and why drillers would like to see a cracker plant located somewhere in the region. The Mariner West ethane pipeline, a joint venture between MarkWest Energy and Sunoco Logistics, is now open for business according to Range–shipping ethane from the Marcellus/Utica region to Sarnia where the NOVA Corunna cracker plant is located. Wet gas found in southwestern PA, eastern OH and the northern panhandle of WV contains not only methane (natural gas), but other compounds as well–like propane, butane and most abundantly, ethane. Ethane must be removed from methane in order to make methane “pipeline ready.” Ethane is currently a waste product for Marcellus/Utica drillers. However, ethane is valuable if you can get it to a cracker plant where it can be chemically “cracked” into ethylene–the raw material used to make plastics. Cha ching! Ethane goes from being a waste product costing you money to dispose of, to being a valuable commodity you get paid for. That’s now happening for Range, the first Marcellus driller to take advantage of this new capability. More ethane pipelines on the way There are more ethane pipelines currently under construction, including the ATEX Express which will connect to the Gulf Coast (see the Enterprise Products Partners category on MDN), and the Bluegrass Pipeline, a natural gas liquids (NGL) pipeline (see Williams, Boardwalk Announce Marcellus-to-Gulf Coast NGL Pipeline). It would not surprise us to see several more ethane/NGL pipelines built in the northeast region. Mariner West project Here’s a description of the Mariner West project from Sunoco Logistics: Mariner West is a pipeline project to deliver ethane from the liquid-rich Marcellus Shale processing and fractionation areas in Western Pennsylvania to the Sarnia, Ontario petrochemical market. The project is anticipated to have an initial capacity to transport up to 50,000 barrels per day of ethane and can be scaled to support higher volumes as needed. Ethane is a byproduct of natural gas development. In order to utilize the byproduct, a pipeline will be built and connect with existing pipelines to move ethane from operations in Western Pennsylvania to the petrochemical market in Sarnia, Ontario, Canada. Sunoco Pipeline L.P., a subsidiary of Sunoco Logistics, will construct a pipeline from MarkWest Energy Partners L.P.’s Houston, Pennsylvania processing complex in Houston, PA to an inter-connection with an existing Sunoco Logistics pipeline at Vanport, Pennsylvania. Mariner West is scheduled to be operational by July 2013 to meet the expectations of the ethane producers and consumers.(1) The following article appeared a few weeks ago in the WV State Journal (before the pipeline went online). It provides valuable background and perspective on the Mariner West pipeline project: The first pipeline capacity for relieving the upper Ohio Valley’s ethane bottleneck is just about to go into service. Mariner West, a joint venture of MarkWest Energy Partners and Sunoco Logistics, will carry ethane from MarkWest’s Houston, Pa. fractionation facility north to existing Sunoco pipeline, then west to Michigan and up into Sarnia in Ontario, Canada. Ethane is one of the natural gas liquids that come to the surface with methane in the “wet” region of the Marcellus and Utica shales: the upper Ohio Valley, where Ohio, Pennsylvania and West Virginia come together. Separation technologies, markets and transport have long been established in the region for propane, butane and other liquids. But dealing with large quantities of ethane has only become necessary in the region in the last few years as shale gas producers focused on wet gas to take advantage of a premium for liquids in the current low natural gas price environment. Without the means of separating and transporting ethane, producers have had to leave it in the methane and sell at a loss to homes and businesses as part of the natural gas. Midstream, or transportation and storage, companies foresaw several years ago the need to take ethane away to markets on the U.S. Gulf coast and in Sarnia, and Mariner West will be the first to come online. Announced in September 2011, Mariner West is expected to open with the 50,000 barrels per day capacity originally planned, and on or very close to the hoped-for July 2013 startup date. “We’re kind of in the initial start-up stages of our de-ethanization facility at our complex in Houston, and so probably in the next few weeks here it’ll be in full operation,” said MarkWest Vice President Joshua Hallenbeck. The statement reflects the incremental way new infrastructure will come online, because both separation and transportation facilities are needed. The de-ethanization facility at Houston will have the capacity to produce 38,000 barrels per day of ethane. Following the startup of that unit this month, MarkWest also has coming online de-ethanization at Majorsville at the Pennsylvania-West Virginia border later this year, another unit at Houston early next year and a fourth unit in the Utica Shale in Ohio in late 2014, all at the same 38,000 bpd capacity. Those de-ethanizers will feed the Mariner West pipeline and, later, the Enterprise Products Partners Appalachia-to-Texas, or ATEX, pipeline starting in early 2014 and Mariner East to Marcus Hook near Philadelphia in early 2015. The growing amounts of ethane have been raising the energy content of the region’s methane up to established pipeline specifications, in some cases requiring waivers to go beyond those specifications, even to the point of limiting the amount of methane that can be piped out of the region. “This is going to help the BTU (British thermal unit, or a measure of energy content) levels of the methane decrease, which is critical to unlocking the full value of the shale gas resources,” Hallenbeck said.(2)
Posted on: Thu, 25 Jul 2013 15:58:25 +0000
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