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U.S. Senators Push For Appalachian Ethane Storage Hub Study

U.S. Sen. Shelley Moore Capito (R-WV) has introduced a bill that would require federal agencies to study the feasibility of an underground ethane storage and distribution hub in the Appalachian Basin.

The legislation (S 1075) would direct the Departments of Energy and Commerce, along with other relevant agencies, to examine potential locations for the storage hub in relation to production, the economic benefits, other infrastructure required to support it and potential industrial consumers. The Appalachian Ethane Storage Hub Study Act would be completed within two years of enactment.

Sens. Rob Portman (R-OH) and Joe Manchin (D-WV) are co-sponsoring the bill. Capito has tried in the past to push the study through as an amendment to other legislation that failed.

The study, she said, would "help us figure out the best way to utilize the region's resources and improve our infrastructure. Not only will this legislation inform future projects and policies, but it will also help attract private dollars to ensure Appalachia remains an important player in America's energy and manufacturing strategy."

The bill was introduced last week and has since been referred to the Senate energy and natural resources committee. It comes as Shell Chemical Appalachia LLC is constructing a multi-billion dollar ethane cracker in Western Pennsylvania that would consume about 100,000 b/d of ethane. That facility is scheduled to come on stream next decade, but it has helped spark the efforts of elected officials and private industry to expand Ohio, Pennsylvania and West Virginia's manufacturing base.

Pennsylvania commissioned IHS Markit to conduct a study that found the Marcellus and Utica shales contain enough ethane to accommodate up to four more ethylene crackers in addition to Shell's. When it comes to infrastructure, however, the tri-state region needs more of it. Underground storage, the study found, is grossly insufficient in the basin, especially if a growing petrochemical industry and the midstream expect to operate stably.

The study estimates that the region needs 3.5-7.5 million bbl of liquids storage to foster more development. Currently, there is no underground liquids storage in the region. Only one project has been announced by Mountaineer NGL Storage LLC. The company has plans for a 2 million bbl facility in southeast Ohio.

A feasibility study, the bill's sponsors said, would demonstrate the economic potential of such a project, inform future policy for energy infrastructure and encourage private investment that could help to revive Rust Belt areas.

About two-thirds of North America's ethylene output comes from the Gulf Coast. The sponsors said the study is in the national interest because it would help diversify petrochemical refining and manufacturing capabilities that are concentrated in the South and under constant threat of natural disasters such as hurricanes. More diversification, they said, would help the Gulf focus on exports that could aid U.S. trade.

Establishing a storage hub in the Northeast, the sponsors added, would also help prevent waste by preserving manufacturing feedstocks that are currently being rejected into the gas stream.

Shell's facility is one of five that have been announced for the Appalachian Basin. While most of the other projects are in limbo, Thailand's PTT Global Chemical pcl is expected to make a final investment decision later this year about a multi-billion dollar ethane cracker that would be located in Ohio.

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