Skip to comments.Ashtabula will receive Texas-size shale boost
Posted on 10/07/2013 8:48:55 PM PDT by 2ndDivisionVet
Ashtabula is about to benefit from the Utica shale boom, as a Texas energy company and a technology firm from Columbus plan to build a gas-to-liquids processing plant in the city.
Houston-based Pinto Energy said it will spend about $300 million to build the plant, which is expected to be completed and online in early 2016. The plant would take processed natural gas from the Utica and Marcellus shale plays and convert it into diesel fuel, high-end lubricants and industrial waxes used in cosmetics, pharmaceuticals and other products.
Once finished, the plant will employ about 30 people, but Pinto said it expects to employ about 400 construction workers to build it. Pinto figures the plant also will support more than 100 jobs among suppliers, contractors and others not directly involved with on-site construction.
Three things came together to put the plant into motion: new technology from the Columbus-area company, Velocys; new supplies of cheap gas coming from the shale plays of Ohio and Pennsylvania; and Ashtabula's proximity to both the gas plays and necessary rail and barge terminals.
Velocys' technology is based on something known as the Fischer Tropsch processes more commonly referred to as FT processes in the gas processing industry. The process is complex, but it involves a series of chemical reactions that form liquid hydrocarbons from the components of natural gas. Essentially, it builds longer chains of hydrocarbons to form diesel fuel and other components, using smaller molecules found in natural gas as its building blocks.
The result, say the companies and other scientists familiar with the process, is a form of diesel fuel lower in sulfur and other impurities than the diesel fuel produced by refining.
Refiners begin their process with heavy crude oil, and then strip away impurities and unwanted substances until they are left with the gasoline, diesel fuel and other products they need.
But refineries don't remove all the impurities, so they end up with a dirtier form of diesel than is produced by an FT process, said Velocys business development director Tad Dritz. With FT technologies, processors aren't dealing with any impurities to begin with, he said.
To get it to be diesel fuel you basically have to dirty it up a little, Mr. Dritz said.
Other gas-to-liquids processes exist, but the most common require far larger plants often costing $10 billion or more to build and can't be scaled down the way Velocys' system can, said representatives of both Pinto and Velocys. The square footage of the plant was not disclosed, but it will sit on an 80-acre site, which developers say is big enough for both the initial plant and future expansions.
Pinto said components for that plant are being built in Pasadena, Texas, by Ventech Engineers International. The plant's design should be completed by the end of this year; construction is scheduled to begin in Ashtabula in the first half of 2014. A little flare
The announcement of the plant probably says as much about the potential of the Marcellus and Utica plays as it does anything else. Pinto and Velocys say their expectations for the two plays drove the decision to build the plant, and they only expect production to increase, particularly from the Utica.
Although drilling in the Utica has yet to take off, recent data from the Ohio Department of Natural Resources show the play's development is speeding up. A total of 885 horizontal shale drilling permits had been issued by Ohio as of mid-September and, of that number, 428 permits were issued just this year. Many of those wells are expected to be brought online quickly as pipelines and processing facilities are completed this year and in 2014.
Pinto has said it plans eventually to expand the Ashtabula plant, bringing its production capacity up to about 7,000 barrels of liquids per day, and it will consider building additional plants in the Utica region and elsewhere, using Velocys' technology.
Velocys, however, hopes for even more.
Because its technology is scalable and relatively portable its gas-to-liquids plants are constructed off-site and then built where they are needed the company hopes to find more uses for its process, Mr. Dritz said.
For example, the technology could be used in places such as the Dakotas, where drillers working in the vast Bakken shale play currently burn off the gas they find right at the wellhead, in a process called flaring. That's because drillers there are focused on recovering more valuable crude oil and, at its recent low gas prices, the natural gas they find is more a nuisance than an asset.
As a result, the Bakken lights up bigger and brighter than Chicago at night, as evidenced by recent satellite photographs in which the play looks like a vast and busy metropolis once the sun goes down.
I am personally very passionate about putting out the flares and that's a great opportunity for us, Mr. Dritz said.
Great news for an economically depressed area!
MORE DIESEL! Yum.
Me too. Free fuel.
Natural gas to diesel.
Pretty big boost to Ohio if the state embraces refining.
Ping...not Youngstown but still NE Ohio news of possible interest.
The Jobs and energy are flowing thanks to John Kasich.
The trains are running for the first time in 30 years.
I never worked oil in TX
But it used to be good business in NE OH.
In places you can smell to vapors leaking out of the ground.
From what I know, Ashtabula has been a depressed area for a long while. This would be a big help to the area. I wish them well.
Speaking as someone from NE OH,
You must be old....
I used to build oil well production units back in the day.
Where and what decade?
I was raised between Akron and Canton.
Ytown area, until 1979.