Posted on 10/30/2013 5:52:21 AM PDT by thackney
The US shale gas revolution is producing a lot of ethane in the Northeast that doesn’t have an obvious market. New pipeline projects are taking care of that issue, as Bridget Hunsucker discusses in this week’s Oilgram News column, At the Wellhead.
New NGL pipeline capacity will soon come online in the US Northeast, much to the relief of natural gas producers who face a perplexing logistics dilemma with unwanted ethane. Sunoco Logistics’ Mariner West project and Enterprise’s Appalachia-to-Texas Express Pipeline (ATEX) pipeline, both of which will transport a glut of unwanted ethane from the area, are expected to ramp up volumes in the next few months.
“The good news is the producers will have a way to evacuate that ethane,” Peter Fasullo, a consultant with EnVantage said. “If we did not have Mariner West or ATEX coming online we would have real problems.”
There are two main options for producers to manage the ethane found within a natural gas stream: reject it by leaving it in the pipeline stream, or recover it by separating it out.
n the region, a sort of Catch 22 situation has emerged in recent months where some Utica and Marcellus producers, unable to deploy either option, have scaled back production.
A lack of outgoing ethane pipeline capacity from the region meant that the product could not be recovered. The ethane could also not be rejected into some regional natural gas pipelines, as they limited the gas stream’s ethane content.
“The situation is going to improve fairly dramatically over the next several months as the new ethane pipeline capacity starts coming online,” Fasullo said. “I suspect next year, sometime, once Mariner West gets fully loaded and once ATEX is blowing and going, so to speak, you could see 70,000 b/d to 90,000 b/d of ethane being extracted.”
Virtually no ethane is now recovered from the Marcellus or Utica Shale plays, Fasullo noted.
And up until recently, more had been rejected.
During the summer, natural gas pipelines in the northeast including Texas Eastern Transmission Pipeline (TETCO), Columbia Gas Transmission and Dominion Transmission, “had some issues” with excess ethane, Bentek analyst Diana Oswald said. Bentek is a unit of Platts.
This was a direct result of ethane rich gas coming out of Northeast production fields.
Ethane burns hotter than natural gas, making trouble for local distribution companies, Bentek analyst Marissa Anderson explained, noting that the issue does not directly affect pipeline integrity.
“The main concern is actually for the end users,” she said. “The systems aren’t designed to burn that much ethane because it gets too hot.” Most natural gas pipelines have a btu gas quality specification of 1100, she added. In August, TETCO changed its tariff to follow a unified standard of 12% C2+, 1110 Btu and 1400 Wobbe Index, Oswald said. This cut the amount of ethane allowed in the pipeline.
“Scaling back on ethane rejection, ultimately lowers production volumes, and we had estimated that the TETCO tariff change, resulted in approximately 5% reduction in volumes,” Oswald said.
Producers will be able to ramp back up once ethane pipeline capacity comes into service and “they no longer have to worry about ethane rejection,” she said.
Ethane prices are expected to continue to be priced lower than natural gas for some time, Fasullo said.
“But it’s much better to take that kind of loss than throttle back production. It should not be a bottleneck going forward,” Fasullo said. Already major natural gas producer Range Resources is taking advantage of the startup of Mariner West’s initial capacity by recovering some ethane, sources said.
Mariner West, which runs from the Marcellus Shale processing and fractionation areas in Western Pennsylvania to the Sarnia, Ontario, petrochemical market, initially began service earlier this year. It’s capacity is ramping up to 50,000 b/d.
Likewise the 190,000 b/d ATEX pipeline system will also originate in Pennsylvania, but will terminate at in the US Gulf Coast, where it will have assess to the nation’s premiere NGL storage facility in Mount Belvieu, Texas. From there, the product could flow on Enterprise’s Aegis Pipeline, which will move ethane to the Gulf Coast’s expanding petrochemical corridor. The 425,000 b/d pipeline is expected to begin initial deliveries in the second quarter of 2014.
“Mariner West, combined with ATEX…and Mariner East, which is expected to come online with the ethane portion of the project in 2015, will enable Range to sell 55,000 barrels of ethane per day,” CEO Jeffrey L. Ventura said during the company’s second quarter earnings call, according to a transcript on seekingalpha.com
Sunoco’s Mariner East project will deliver both propane and ethane from the Marcellus Shale to Sunoco Logistics’ Marcus Hook facility in southeastern Pennsylvania. The pipeline will have an initial capacity of 70,000 b/d.
But the amount is rather limited to keep the BTU/volume under an maximum range to prevent burning up the equipment designed to burn nearly pure methane.
What would it cost to convert the ethane to ethanol? It has to be cheaper than converting corn to ethanol.
No, it does not have to be.
The energy required to attach an -OH molecule to ethane is higher than deriving it from the gluco- chain found in cellulose.
It’s too expensive to convert C2H6 to C2OH.
Can it be compressed to a liquid economically? Like propane or butane?
LNG is a great potential fuel, but not easily made a liquid. High pressure required.
Cam you tell what have they been doing with the excess ethane?
Tennesee Gas Pipeline
Algonquin Pipeline
And the one connected to Algonquin in New England (MAritime? Pipeline)
The Tn Pipeline is getting a massive overhaul, been amazing to watch them move from the Delaware water Gap to within 25 miles of Manhattan, slowly, steadily.
LNG is stored at low pressure, nearly atmospheric pressure when compared to CNG, Compressed Natural Gas.
LNG is created by cooling methane (natural gas) down to -260 °F, not compressing. It cannot be compressed to a liquid at ambient temperature, that is far above the critical temperature point.
Can it be compressed to a liquid economically?
It can be compressed to liquid economically relative to the price of ethane. It needs to be compressed to ~550 psi to become liquid. Although the compression generates significant heat which requires cooling before economic storage, it does not require cooling to remain liquid, unlike LNG.
Ethane is primarily used for the plastic industry.
Ethane is used to ethylene, polyethylene, etc.
Did not know that, thanks. So it has more potential as a vehicle fuel?
I would say no. Ethane is produced in a far lower volume than methane or crude. I don't think it could ever supply are significant portion of the transportation fuel market and it has too much demand in the plastic industry to expect a significant surplus.
There is a short term surplus going on in a few areas, but it is very small compared to the transportation fuel market, extremely tiny I would say.
There are new plastic plants and ethane crackers in the works that are going to soak up the surplus in the next year or two. Several are already in the works.
This is more of a transitional regional issue and pipelines and plants are going to take advantage of it shortly; the money is already being spent.
For comparison, the ethane/ethylene market is under 1 MMBPD while our transportation fuels market is ~14 MMBPD.
A 10~20% growth in the ethane supply is not going to be a big enough supply for a major manufacture to produce vehicles that use it. And it is far more likely to be more valuable to replace imported plastic feedstocks.
thackney....correcting our petroleum-based energy misconceptions for a good while now.
A worthy service :)
Thanks
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