Energy Transfer 3Q18: Mariner East 2 Pipeline Online by Christmas

Yesterday the muckety-mucks from Energy Transfer (ET) held a conference call with Wall Street analysts to discuss the company’s third quarter 2018 update. Inevitably on such calls there’s talk about what’s coming up in addition to what happened in the previous quarter. ET is a big midstream (pipeline) company. Among their projects are the mighty Rover Pipeline, which reaches from Pennsylvania, West Virgina, and eastern Ohio all the way into Michigan, and the Mariner East 2 Pipeline, which runs from eastern Ohio all the way through Pennsylvania to the Philadelphia area. Rover flows natural gas, ME2 (and ME2X) will flow NGLs, mainly ethane and propane. According to Tom Long, ET’s Chief Financial Officer, ME2 will be up and running sometime this quarter. Since the end of this quarter is around Christmastime, we prefer to think of ME2 as a Christmas present for Marcellus/Utica drillers.
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Kinder Morgan Cancels UMTP – Utica Marcellus Texas Pipeline

Once again it seems environmentalists in Kentucky have won–stopping yet another NGL (natural gas liquids) pipeline. On Wednesday Kinder Morgan, one of (perhaps the) largest pipeline companies in North America, announced it is canceling plans to convert part of its Tennessee Gas Pipeline (TGP) that currently flows natural gas from the Gulf Coast to the northeast, to reverse the pipeline and flow natural gas liquids (NGLs) from the Marcellus/Utica region to the Gulf Coast. The project, called Utica Marcellus Texas Pipeline (UMTP), would have cost $4 billion. Instead, Kinder says it will still seek to reverse a big portion of TGP, but will instead flow M-U natgas south, instead of NGLs.
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Petrochemicals & Shale – Joined at the Hip (IEA Report)

On numerous occasions we’ve pointed out the lunacy of the “keep it in the ground” gang–those who believe we should end the use of all fossil fuels as soon as possible. Why can’t we do it? For many reasons. Here’s just one: petrochemicals. Did you know that all sorts of products you use every day–things like plastics, fertilizers, packaging, clothing, digital devices, medical equipment, detergents and tires–come from oil and gas? Without oil and gas, we’d quickly descend back into the Stone Age, living short, brutish lives. That point was driven home in a new report titled “The Future of Petrochemicals” (full copy below), part of an International Energy Agency (IEA) series that shines a light on “blind spots” in the global energy system.
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Turning Ethane into Plastics – A Primer for Anti-Fossil Fuelers

Without natural gas, modern life as humans know it would cease. And no, that’s not hyperbole or bluster. And yet, non-thinking anti-fossil fuel protesters refuse to acknowledge that basic truth. We spotted an excellent article in Forbes that outlines the vital importance of shale gas (specifically the ethane that comes as part of shale gas extraction). We love the straightforward simplicity of the article in describing how the shale ecosystem works–and how it touches on virtually every aspect of our modern existence.
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Opposition to Kinder Morgan NGL Pipeline Plan Builds in Kentucky

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What is it about Kentucky? Is everybody in the Bluegrass State allergic to NGL (natural gas liquids) pipelines? Another government official, this time the mayor of Lexington, is the latest (in a long list) to oppose Kinder Morgan’s plan to convert part of their Tennessee Gas Pipeline to flow NGLs–called the Utica Marcellus Texas Pipeline (UMTP) project.
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MarkWest Plans to Build New Marcellus/Utica NGL Pipeline

Yesterday MarkWest Liberty NGL Pipeline, a subsidiary/part of MarkWest Energy (now MPLX since being bought out and merged into Marathon Petroleum in late 2015), announced plans to build a new NGL pipeline. MarkWest Liberty launched a binding open season for the new pipeline–a time when drillers can sign on the dotted line to reserve capacity along the new pipeline. The new NGL pipeline is a bit different than other NGL pipelines in the Marcellus/Utica. It will pick up NGLs from several of MarkWest’s gas processing plants in Pennsylvania and West Virginia, and cart the NGLs to fractionation facilities owned by MarkWest in PA and Ohio, where those NGLs will get separated into their discrete hydrocarbon components. Let us explain it this way: Step One is that the gas comes out of the ground. But it’s not all just methane–there’s a number of other hydrocarbons (natural gas liquids, or NGLs) mixed in with it, things like ethane, butane, propane, pentane. The raw mix goes to a cryogenic processing plant where the methane (i.e. natural gas) is separated out and sent on its way to market via pipelines like Rover and Rockies Express and others. Step Two: The NGLs need further separating. That’s what a fractionation plant does. This new pipeline from MarkWest Liberty (the Marcellus unit of MarkWest) will cart the mixed bag of NGLs to fractionation facilities. After being separated into component parts, the components can then be sold. Which fits with MarkWest’s prior statements that in 2018 they would focus on creating new markets for Marcellus/Utica NGLs, butane in particular (see MarkWest Building 6 New Processing Plants, 3 Fractionators in 2018). So, which processing plants will the pipeline connect to, and which fractionation plants? The announcement does not say, and there is no PDF document available with the details, at least not publicly. For that, you need to contact MarkWest directly. We do, however, have a map of MarkWest’s facilities…
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How MarkWest Gets Marcellus/Utica NGLs to Market

The Marcellus and Utica Shale layers in Southwestern Pennsylvania, northern West Virginia and eastern Ohio produce a boatload of NGLs–natural gas liquids. One company had the foresight to plan a strategy to separate, transport and sell those NGLs. That company was MarkWest Energy, now known as MPLX following a purchase by/merger into Marathon Petroleum. MarkWest’s plan is firing on all cylinders. The experts at RBN Energy have analyzed MarkWest’s initial strategy, now largely complete, and their long-term strategy, still in the works, to give us a great snapshot of how NGLs are moving from our region to Midwestern and Canadian markets…
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Is the Appalachian NGL Storage Hub Close to Reality?

A pair of recent stories shows that progress is being made with respect to building an ethane (NGL) storage hub somewhere in the Marcellus/Utica region. In fact, progress is being made on two such facilities. Appalachia Development Group is leading an effort to get a $10 billion NGL (primarily ethane) storage hub established in Appalachia–most likely in West Virginia (see WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub). Federal loan guarantees are in the works for that massive project and an engineering firm has been hired. Meanwhile, Mountaineer NGL Storage is planning a smaller facility in Monroe County, OH, located just across the river (and border) from West Virginia (see Final State Permits Expected Soon for OH Mountaineer NGL Storage). The Colorado company behind the Mountaineer NGL project plans to spend up to $500 million to build it. Some 20 drillers have expressed interest in contracting with the facility to store ethane, and the nearby PTT Global cracker plant project (if it gets built) and the under-construction Shell cracker plant are both interested in connections to the facility. But that may not be all! According to Katie Klaber, former president of the Marcellus Shale Coalition and principal of The Klaber Group, “We may not end up seeing just one storage hub, but instead it will be some interconnected groups of pipelines and storage.” In other words, we may see even more such facilities. It certainly appears that major progress is being made on the two named projects…
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Sen. Pat Toomey Claims Trump Tariffs Will Delay Shell Cracker

US Sen. Pat Toomey

Pennsylvania’s U.S. Senator Pat Toomey is a DC swamp dweller–let’s just be honest about it. He’s a Republican, largely in name only. He’s better than a Democrat–but not by much. Toomey is claiming that President Trump’s attempt to stop the flow of foreign steel dumping in our markets by using tariffs (dumping which hurts our own steel industry and isn’t anywhere close to being fair or free trade), will delay incoming material for the Shell ethane cracker plant in Beaver County and result in the layoff of “hundreds” of workers. A Shell spokesman neither confirms nor denies Toomey’s claims but uses doublespeak to sidestep the issue–meaning Shell likely asked Toomey to be the front guy in shaming the Trump Administration into granting waivers so they can get their cheap, imported steel. Toomey has been an early and repeat critic of Trump. Toomey opposed Trump’s tariffs from the beginning and is currently trying to get a new law passed stripping the President of his constitutional power to impose tariffs…
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WV Gov. Justice Perpetrating an Injustice on NatGas Developer

Steven B. Hedrick

In June MDN told you about a controversy swirling around Steven B. Hedrick, CEO of Appalachia Development Group and also CEO of the non-profit Mid-Atlantic Technology, Research and Innovation Center, or MATRIC (see Manufactured Controversy re $10B NGL Storage Hub Proponent). Hedrick, in his role as CEO of Appalachia Development Group, has led an effort to get a $10 billion NGL storage hub established in Appalachia–most likely in West Virginia. It’s a huge amount of money, will take cooperation from multiple states and will require multiple sources of funding to make it all happen. Hedrick has led the effort. Both of WV’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat) have worked on behalf of this project and have had words of high praise for Hedrick and his efforts. And then, “out of the blue” last month comes an attack on Hedrick from the Charleston Gazette-Mail. We now know why–the attacks were instigated by WV Gov. Jim Justice. Which makes us scratch our head. What in the world is Justice thinking? Why would he attack the one person who is key to the state attracting a project (and investment) equivalent to two cracker plants? What is Justice smoking?…
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Seneca Lake LPG Storage Project is Now Officially Dead

Basil Seggos, Commissioner of the New York Dept. of Environmental Conservation (and tool of Andrew Cuomo and Big Green radicals) has officially killed the Seneca Lake LPG storage project planned near Seneca Lake. In May, Crestwood, the project’s sponsor, said the depleted salt cavern that would house the LPG (propane) underground may leak in one small area (see Crestwood Testing Proposed LPG Storage Site @ Seneca Lake for Leaks). That was all the Big Green radicals, including Seggos, needed as an excuse to kill the project. Seggos saw his opening and took it. Last Thursday Seggos issued a 31-page ruling denying the project (copy below). It’s obvious from the length of the report and the stated reasons that he uses, that Seggos had already, long ago, decided to deny the project. He talks about cockamamie, airy fairy things like the project is “inconsistent with the character of the local and regional Finger Lakes community.” Really? As if the salt mining operation that used to be there was consistent with the character of the region? It’s all nonsense. This report was written months ago, before the “leak” issue was known. The fact that one small part of the underground storage caverns (plural) is not airtight was the magic bullet Seggos needed to pull the trigger. And he did. While Crestwood has not yet responded and admitted that the project is dead, we see no way it can now move forward. Hey Schuyler County, how does it feel to kiss a $30 million addition to your tax base goodbye? What’s that? Nobody is left who lives in Schuyler County any more? Guess we know why…
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Europe Building New Cracker, to be Fed by Marcellus/Utica NGLs

Here’s some exciting news: The first ethane cracker plant to get built in Europe in the past 20 years has just been announced by INEOS. Based in Switzerland, INEOS is a young but rapidly growing chemical company with roughly $40 billion in sales per year. INEOS’ competitors would be companies like BASF, Bayer and Dow Chemical. INEOS has its fingers in a lot of pies. For example, the company currently has two ships that shuttle Marcellus and Utica Shale ethane from Philadelphia to Scotland and Norway (see Ineos Gets Ready to Begin Ethane Exports from Marcus Hook, PA). INEOS has also been tapped to provide the technology for an ethane cracker plant to be built in Belmont County, OH (see PTT Taps Swiss Company INEOS for OH Cracker Plant Technology). INEOS already owns their own cracker plant in Scotland (see Cracker Plant in Scotland “Brought Back to Life” Thx to Marcellus Ethane). Now the company plans to build a €2.7 billion (US$3.2 billion) cracker plant and propane dehydrogenation unit in northern Europe. A specific country/location has not yet been selected. An INEOS official said, regarding the new cracker facility: “All our assets will benefit from our ability to import competitive raw materials from the US and the rest of the world.” Our translation: We love cheap Marcellus/Utica NGLs, and this plant will use lots of it…
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DOE Publishes Updated NGL Primer for Marcellus/Utica

Last December the Trump Dept. of Energy published a 45-page report called, “Natural Gas Liquids Primer: With a Focus on the Appalachian Region” (see DOE Publishes NGL Primer for Marcellus/Utica, Pushes NGL Storage). The DOE used its own data along with data from the U.S. Energy Information Administration (our favorite government agency) to create an up-to-date picture of Appalachian NGL supply, demand, and infrastructure. It’s only been six months, but the DOE is back with an updated edition of the same report. Hey, things are changing fast in this space, and Team Trump is on top of those changes. What’s different between the last report and this one? The new report includes “even larger projections for ethane production from the Marcellus and Utica shale plays than previously estimated.” There’s a new section identifying R&D opportunities related to natural gas and NGLs production, conversion, and storage. Perhaps most eye-opening is this: NGLs production in the M-U region is projected to increase over 700% from 2013 to 2023. Yikes! Here’s the latest and greatest from one of the few functional government agencies in Washington…
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WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub

A recent article in the left-leaning Roll Call (official publication for Washington, D.C. swamp dwellers) attempts to paint the Trump Administration as out of step with the people he wants to help in West Virginia. The article says Trump’s strategy to prop up failing coal and nuclear plants is an attempt to boost coal mining jobs in WV, but is running counter to the state’s strategy of embracing the natural gas industry. Perhaps they have a point. However, what’s most interesting about the article is not the ginned up conflict between Trump and WV, but how the article spotlights WV’s two U.S. Senators–Republican Shelley Moore Capito and Democrat Joe Manchin–and their continuing role in trying to make a $10 billion NGL (mostly ethane) storage hub facility become a reality. The storage hub will be a jobs magnet with some estimates that it will create more than 100,000 new jobs in the state. The storage hub will also draw manufacturers looking to locate near ethane crackers, as a source for plastics used in their manufacturing process. Capito, in her comments, attempts to gloss over the rivalry between coal and natural gas, saying “all those rivalries have gone by the wayside.” Er, a, we beg to differ. But leaving aside the coal v. natgas focus of the article, we found two very interesting items. (1) The Dept. of Energy loan guarantee that would cover $1.9 billion of the estimated $10 billion cost to build it is a much bigger deal that we had realized. Why? Because any project that wins such a guarantee has gone through a rigorous review process. Winning such a guarantee is like conferring a triple A rating on the project for others who will consider investing in the project. It gives them confidence that the project has been thoroughly vetted and is low risk. (2) Manchin, in speaking with DOE Sec. Rick Perry, is using an interesting and novel argument to convince Perry the storage hub is a good thing to do. Manchin said when hurricanes hit the Gulf Coast, it knocks out petrochemical industry there, with a cascading effect across the U.S. Cracker plants (fed by the storage hub) in the northeast, are not susceptible to hurricanes. So Manchin’s pitch to Perry is this: Keep the Gulf Coast crackers cooking for products to export to other countries, but let’s build the storage hub (and crackers) in the northeast, so our country’s petchem industry isn’t adversely affected by a major hurricane…
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EIA Report Shows Low Demand for NGLs in Marcellus/Utica Region

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We spotted a blog post from our favorite government agency, the U.S. Energy Information Administration, that made us sit up and take notice. The EIA wrote about the consumption rates of what they call hydrocarbon gas liquids (HGLs). We call it natural gas liquids (NGLs). We typically define NGLs–the “other” hydrocarbons that come out of the hole along with oil and gas–as compounds like ethane, butane, propane, isobutane and pentane. All the “-anes.” EIA goes one step further and includes the “-enes”–ethylene, propylene, butylene and isobutylene. The EIA post talks about what these compounds are used for. The thing that caught our attention was the chart showing “Top ten hydrocarbon gas liquids-consuming states, 2016.” The chart lists which states “consume” or use the most NGLs (HGLs). Put another way, the chart shows where the best markets are for selling NGLs. And frankly, it ain’t around here! Only one M-U state, Pennsylvania, even appears in the list of top 10 states. Both Iowa and Illinois use more NGLs than PA! Why is that? Simple answer: Both of those states, along with Texas, Louisiana, and Kentucky are the only states in the country that possess functioning ethane cracker plants. Cracker plants sop up a LOT of ethane, a lot of NGLs, and it shows in the numbers. PA will no doubt make its up the top 10 list when the Shell cracker goes online. Ohio, should PTT build a cracker there, will begin to appear in the list. And WV, if LyondellBasell buys Braskem and builds a cracker near Parkersburg, will also begin to appear in the list. Until that time, the brutal fact is that there just isn’t much of a market in our region for the abundant volume of NGLs we produce–meaning drillers must export NGLs out of our region, or those NGLs become an expense, costing money to get rid of…
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Manufactured Controversy re $10B NGL Storage Hub Proponent

Steven B. Hedrick

There’s a new (manufactured) controversy swirling around Steven B. Hedrick, CEO of Appalachia Development Group and also CEO of the non-profit Mid-Atlantic Technology, Research and Innovation Center, or MATRIC. What’s that? You’re not familiar with that name? Hedrick, in his role as CEO of Appalachia Development Group, has led an effort to get a $10 billion NGL (primarily ethane) storage hub established in Appalachia–most likely in West Virginia. It’s a huge amount of money, will take cooperation from multiple states and will require multiple sources of funding to make it all happen. Hedrick has led the effort. Both of WV’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat) have worked on behalf of this project (one could argue they’ve worked on behalf of Hedrick) and have had words of high praise for Hedrick and his efforts. But the Charleston Gazette-Mail, working in tandum with the left-leaning ProPublica, has decided Hedrick needs to be taken down a notch or two. In a recent article, the Gazette-Mail tries to paint Hedrick as having a big conflict of interest and bilking taxpayers for a trip. Hedrich was a member of the delegation that visited China last year when then-Commerce Secretary Woody Thrasher got China to sign a mammoth $83.7 billion deal to invest in shale and petrochemicals in WV (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). The Gazette-Mail article says Hedrick went on the taxpayer-funded trade mission not to represent WV, but on his own behalf, attempting to get Chinese investment that would somehow benefit him (Hedrick) personally. No doubt he was trying to get the Chinese interested in investing in the $10 billion storage hub. We would expect nothing less! But that attempt has now been twisted into a narrative that Hedrick was trying to benefit himself rather than WV…
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