The natural gas processing infrastructure already built by some midstream companies in the Marcellus and Utica shale regions to date has cost about $10 billion. This infrastructure is already inadequate to meet supply even without figuring in the forecasts of the output likely from these regions. Midstream companies such as Blue Racer plan to double their processing capacity over the next 10 years so that they will be able to meet the demand. Already this demand is high enough that some wells in the Utica shale region are not in production because current pipeline infrastructure is insufficient.
Some estimate that at least another $30 billion will need to be spent on infrastructure development to meet the supply. This is because the gas produced in the Marcellus and Utica Shale region contains natural gas liquids with the dry methane. The gas requires processing and fractionation in order for individual marketing of the products. Stripping the ethane, propane and other liquids from the dry methane is one of the midstream services performed in plants that are an important part of this infrastructure.
One of the reasons the Marcellus and Utica Shale region is so appealing to investors and oil and natural gas producers is its proximity to the Eastern Seaboard and the relatively low costs involved in getting the products to the major metropolitan centers there. In the past, much of the transportation of oil and natural gas has been from the Southwest, which has cost considerably more.
Not only are the oil and natural gas supplies from Marcellus and Utica closer, they are also extremely productive. Experts predict that natural gas liquid production will top 600,000 barrels per day by 2016, which would break all previous natural gas liquid production records. The production from gas wells in the Marcellus shale has reached 13 billion cubic feet per day, while the Utica shale is producing 1.33 million barrels of oil and 33.6 billion cubic feet of natural gas. This number includes natural gas liquids, as well.
A key element of production will be the identification of commercially viable markets for some of the natural gas liquids in order to offset the fluctuations of price and demand that are inevitable with the predicted levels of oil and natural gas forthcoming. Natural gas liquids have many marketable uses already. They are burned for heat, used as feedstock in petrochemical plants and blended with vehicle fuels. For example, in some parts of Europe, a blend of propane and butane is a popular vehicle fuel, while in the United States propane is a popular fuel for heating homes and cooking.
Some midstream companies are choosing to ship natural gas liquids by barge, train or tractor trailers in an absence of other available transportation. There is also consideration for the repurposing of oil pipelines formerly used to transport oil from the Southwest to the Northeast, and deep sea pipelines have been considered for the near future when exportation of natural gas is an option. Many midstream companies are engaging in meetings and conferences to discuss the opportunities and challenges unique to developing an infrastructure that will support the Marcellus and Utica Shale region.