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Ethane Outlets Coming Soon to Marcellus

A one-two punch will help knock down some of the Marcellus Shale ethane glut.

First, in November, Sunoco Logistics' Mariner West ethane pipeline from Houston, PA, to Sarnia, Ontario (see Shale Daily, March 25, 2013; Sept. 8, 2011), will be fully operational, Mariner West shipper Range Resources Inc. said in announcing its third quarter results recently.

"Once fully operational, Mariner West will allow us to continue our planned growth without concern for pipeline quality requirements for our residue gas," Range said.

The first delivery of ethane into Mariner West commenced in July and as of September it was flowing about 20,000 b/d. Ramp-up to 50,000 b/d is expected by the first quarter, according to a recent Sunoco Logistics presentation to investors.

And on Thursday, Enterprise Products Partners said its Appalachia-to-Texas (Atex) Express ethane pipeline will be up and running during the first quarter.

"...[A]s most of you know, it is badly needed by the Appalachia producing community," Enterprise COO Jim Teague said during the Enterprise earnings conference call. "Given the recent problems caused by excess ethane in the region, we wouldn't be surprised to see our flows exceed the contracted volumes as producers look for ways to keep their wells flowing. We will begin line filling this project in December."

Teague said Atex Express should be in service by the end of January, delivering ethane to the processing complex at Mont Belvieu, TX. Initial volumes will be 70,000 b/d on Atex Express.

Ethane inventories have been dropping, "a sign of strong demand," Teague said. However, he added that there is a lot of ethane being rejected and "I guess you could see some more being rejected. We watch our plants...Every day we are looking at the economics of our plants. We are probably in a better position than anyone else to continue to recover because of our value chain. We look at our economics across the whole value chain, not just the plant. So far we have had one plant that has been fairly routinely in rejection; other than that, everything is extracting."

While more Marcellus ethane will be able to make its way to Sarnia and to the Gulf Coast, from the Gulf Coast it could also be exported in the future. Enterprise is developing additional liquefied petroleum gas (LPG) export capability on the Gulf Coast, and so is a partnership of Williams and Boardwalk Pipeline Partners LP (see Shale Daily, Oct. 3). Enterprise could add ethane export capability to its project depending upon global market demand, executives said.

"We're having discussions with a lot of folks," Teague said Thursday. "Other parts of the world, they don't have an understanding of what Mont Belvieu is, for example. There's a lot of education going on. Frankly, I don't think you can have a spread like we have ethane to naphtha and not see some opportunity develop. I think we said that at the new facility we're building we're going to have the capability to add ethane export to it if we get the interest. We're having a lot of discussions with a lot of players."

There are obstacles to ethane export, though. Enterprise isn't willing to sell into a global market and price ethane off of naphtha, Teague said. "So that's the education process," he said. "You know, it’s no different, frankly, in the education process that had to be done with U.S. ethylene plants. They had to come to appreciate the staying power of shale...It's the same story again that you have to go and you have to explain to them and educate them that, 'hey, guys, this is for real and this isn't going to go away anytime soon,' and I think you'll get there."

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