An extensive study that began last year with the backing of a Pittsburgh-based charitable organization and some of the region's major producers to determine the potential of underground natural gas liquids (NGL) storage in the Appalachian Basin is almost finished.
The Claude Worthington Benedum Foundation awarded a $100,000 grant early last year to study if the region could support the kind of underground storage necessary for petrochemical industry growth. The grant was matched by Chevron Corp., EQT Corp., XTO Energy Inc. and several other companies with a stake in shale-related development. Director of the West Virginia University Energy Institute Brian Anderson, who's played an integral role in the study, said it should be complete by the end of the summer.
"There is a lot of opportunity not just for ethylene and polyethylene, but other specialty chemicals that really -- once we start building infrastructure -- comes naturally in that ecosystem," Anderson said last week during a presentation at the Appalachian Storage Hub conference in Canonsburg, PA. Propane and butane derivatives, he added, could also be manufactured in the region if liquids storage was available. A unit of Royal Dutch Shell plc plans to move forward later this year with construction of a multi-billion dollar ethane cracker in Western Pennsylvania.
Support has been growing in the private and public sectors for a network of pipelines, equipment and underground storage to ease supply and demand imbalances if other crackers like Shell's are built.
Anderson said the findings of the Benedum study are expected n September. The goal is to pass along the findings to private industry for a costlier engineering study and ultimately to construct a storage hub somewhere in the basin.
The study has closely examined land along the Ohio River in a corridor that spans Ohio, Pennsylvania and West Virginia. Researchers believe a number of formations could provide ideal conditions for underground storage. They have examined mined-rock, such as the Greenbrier Limestone formation, which at about 2,000 feet underground is shallower than other possible targets that are under study like the Salina salt formation, which is roughly 6,000 feet underground.
The region also has an abundance of depleted gas reservoirs that could be ideal as well. Researchers have ranked 113 of them by the most favorable characteristics. The basin has significant underground gas storage capacity, and it’s long been a staging area to move gas to the Northeast. But its NGL storage and pipeline options are inadequate.
Pennsylvania commissioned a study that found the Marcellus and Utica shales could accommodate up to four additional ethylene crackers. Mountaineer NGL Storage LLC is trying to secure customers for a 3.25 million bbl storage facility targeting the Salina in Ohio, but the state study also estimated that the region needs roughly 4-7 million bbl of liquids storage for more petrochemical development.
Researchers believe the region is right for a storage hub, but Anderson added that the geology there is not as conducive as it is in Mont Belvieu, TX, the North American NGL hub that sits on a shallower salt dome on the Gulf Coast. It would take more work and collaboration among the states to get such a project jump-started, he said.