With stranded ethane in the Appalachian Basin starting to find markets, Sunoco Logistics Partners LP is looking at ways to move other types of natural gas liquids (NGL) from the region.
“As ethane solutions continue to develop, we’re also evaluating propane and butane opportunities in this area as well,” COO Mike Hennigan said during a conference call in late January. “Our ability to access waterborne markets will be important in the future. We expect NGLs to be exported as Marcellus and Utica production continues to grow.”
Without a market nearby, finding a place to sell ethane is a major concern of operators in the liquids-rich region of southwestern Pennsylvania, northern West Virginia and eastern Ohio, but increased production could push heavier NGLs beyond local demand.
In addition to a price advantage, Sunoco officials said they could benefit from transporting propane and butane because those heavier molecules are cheaper to process for export than ethane.
Alongside partner MarkWest Liberty Midstream and Resources LLC, Sunoco recently sanctioned Project Mariner West, a 50,000 b/d ethane pipeline from a MarkWest plant in Houston, PA, to Sarnia, ON. Anchored by a 15,000 b/d commitment from Range Resources Corp., the project is scheduled to come online in mid-2013. Sunoco and MarkWest also are pursuing Project Mariner East, which would convert an existing Sunoco refined products pipeline to move 50,000 b/d of ethane from the wet gas corridor in the Appalachia Basin to the Port of Philadelphia, where it could be exported to Europe.
Pennsylvania, West Virginia and Ohio are working separately on plans to keep as much ethane from leaving the region as they can. A unit of Royal Dutch Shell plc still is contemplating where to site a proposed 60,000-80,000 b/d ethane cracker in the Marcellus region (see NGI, Dec. 5, 2011).
“We still think an additional project is going to be needed for ethane, but as ethane gets a little clearer, we’re starting to look at how does propane and butane in the Marcellus find itself to the marketplace,” Hennigan said. “Over time as that production grows, we think it’s going to make a lot of sense that NGLs should get to a waterborne market.”
Although the liquids component of the natural gas stream in southwestern Pennsylvania, northern West Virginia and eastern Ohio has kept companies interested in the region even with low gas prices, ethane prices are starting to be impacted by oversupply as well (see related story).
Since hitting a high in November of 91 cents/gallon, concerns about oversupply recently sent ethane down 39% to 56 cents/gallon, including a 31% drop in January.
Sunoco officials believe increased gas production in the region will mean more NGLs looking for a market, and the existing pipeline to tidewater could be a solution.
“We’re just bullish that someday we’ll develop a project that will make that all occur,” Hennigan said.
Â©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |