Seems like every few months there’s a meeting or conference somewhere in the Marcellus/Utica region that addresses the topic of ethane storage. Another such a meeting was held in Pittsburgh yesterday. The meeting was preparatory for the upcoming Northeast Petrochemical Exhibition and Conference to be held June 20-21 in Pittsburgh (must attend event!). As with other meetings like it, several NGL storage options were discussed.
There are three NGL storage projects being seriously considered for the Marcellus/Utica region:
Appalachia Development Group is leading an effort to build a ~$10 billion NGL (primarily ethane) storage hub somewhere in Appalachia–most likely in West Virginia (see WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub). Federal loan guarantees are in the works for that massive project and an engineering firm has been hired.
Mountaineer NGL Storage is planning a smaller facility in Monroe County, OH, located just across the river (and border) from West Virginia (see Final State Permits Expected Soon for OH Mountaineer NGL Storage). The Colorado company behind the Mountaineer NGL project plans to spend up to $500 million to build it. Mountaineer NGL President David Hooker attended yesterday’s meeting in Pittsburgh and said he’s still waiting on Ohio regulators to sign off on his project so he can begin building.
Finally, just a few weeks ago Marathon Petroleum became the latest entrant into the NGL storage race, saying it is actively evaluating a plan to use underground salt caverns near its Hopedale fractionation facility in Harrison County to store ethane, butane and propane (see Marathon Considers Building NGL Storage Hub in Harrison County, OH).
The storage hubs will feed ethane to cracker plants. Cracker plants and the resulting jobs that come with those plants, and with the manufacturing plants that will get built near them, are part of the “downstream” sector–end users of the gas and gas liquids produced by the “upstream.” Downstream projects like the Shell cracker under construction and the PTT Global cracker that will hopefully soon be under construction are a crucial part of the shale ecosystem. Without customers to sell the NGLs to, it makes no sense to drill and extract the NGLs. The jobs resulting from the petrochemical and manufacturing sector, potentially tens of thousands of jobs, will have a huge impact on the economies of Pennsylvania, West Virginia and Ohio. It’s a virtuous cycle–upstream to midstream to downstream. All working together.
Here’s a summary of yesterday’s meeting:
A lot of attention has been brought to Shell’s billions-dollar ethane cracker in Beaver County, but less has been paid to another important facet of the region’s petrochemical future.
That piece is natural gas liquids storage, holding in deep underground facilities natural gas byproducts including ethane, butane and propane that are sent through pipelines to ships that carry them overseas. They are also key to building a petrochemical industry here beyond Shell that can compete with the Gulf Coast stronghold, according to a Appalachia NGL Storage panel Thursday.
“Those other areas of petrochemical production have storage and find it’s easier to site petrochemical plants or get them financed if storage is available,” said Rick DeCesar, VP of Midstream & Pipeline at Aecom.
Shell’s petrochemical plant in Potter Township will use a 94-mile pipeline to supply ethane from plants in Washington County and Ohio. But the panelists agreed there were many reasons why any other cracker plants — including one that could be built in Belmont County, Ohio, and another potential in West Virginia — would want to have storage. It ensures against interruptions due to a pipeline or other infrastructure issue as well as an unexpected shutdown at a petrochemical facility.
“I think storage is going to be a critical component of seeing this next level of buildout (in Appalachia),” said Michael Tritt, president of Lane Power & Energy Solutions.
There’s been movement among the tri-state area to build an Appalachian storage hub, although that’s still likely years away. Another project, Mountaineer NGL Storage LLC — backed by Energy Storage Ventures and Goldman Sachs — has been progressing steadily toward an NGL storage facility perfectly located near the PTT Global Chemicals cracker if it is built in Ohio.
Mountaineer NGL President David Hooker said his project was close to approval but still waiting approval for a permit from Ohio officials. It has taken a long time for approvals, from three separate agencies, because NGL storage hasn’t been something attempted in the past in the region.
And beyond the regulatory issues, storage facilities also have to secure financing, connect with or build pipelines, and face other challenges.
“That’s a whole lot of things that have to be coordinated,” said Charlie Schliebs, managing director of Stone Pier Capital Advisors LP.
The panel was convened ahead of the Northeast Petrochemical Exhibition and Conference to be held June 20-21 in Pittsburgh. The conference has become a must-attend event for anyone interested in the petrochemical industry, and this year’s conference will include speeches by BASF Corp. Chairman and CEO Wayne Smith, Covestro Chairman and CEO Jerry MacCleary as well as representatives from Shell Chemical and other companies.*
*Pittsburgh (PA) Business Times (Apr 11, 2019) – Panel: NGL storage key to next step of region’s petrochemical development
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