Range Resources to Sell Ethane to Canadian Chemical Company

Range Resources, one of the largest drillers in the Marcellus Shale, will provide ethane to Canadian chemical company NOVA Chemicals. Methane is the primary compound that is “mined” during gas drilling, but ethane is also one of the compounds produced when drilling. And ethane is used by chemical companies as a “feedstock” or raw material to make plastics. For more background, see this MDN story.

From the company issued press release:

NOVA Chemicals Corporation today announced that it signed a memorandum of understanding with a wholly-owned subsidiary of Range Resources Corporation for a long-term supply of ethane from the Marcellus Shale Basin.

“We are very pleased to be working with Range Resources as one of the key feedstock suppliers for our Corunna cracker,” said Randy Woelfel, Chief Executive Officer [for NOVA Chemicals]. “With the execution of this memorandum of understanding, we have made significant progress towards realizing our goal of assuring our Corunna cracker is the destination of choice for Marcellus based natural gas liquids.”

In addition to finalizing a definitive purchase and sale agreement with Range Resources, and customary reviews and approvals, the arrangement is subject to NOVA Chemicals finalizing a pipeline transportation agreement to transport ethane from the Marcellus Shale Basin into the Sarnia, Ontario petrochemical market. *

Why is this important for landowners? Check your contracts, especially before you sign. If the drilling that occurs under your land includes ethane, it’s worth money. It means your lease and royalties should be worth more if ethane is present. Also, it’s good to know that the market for ethane is rapidly developing in the Marcellus region—meaning more opportunities for both landowners and drillers, and ultimately lower plastics prices for everyone.

*Enhanced Online News/NOVA Press Release (May 2, 2011) – NOVA Chemicals Announces Memorandum of Understanding with Range Resources for Ethane Supply from Marcellus Shale