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…
Continue reading

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…
Continue reading

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…
Continue reading

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…
Continue reading

EIA Report Shows Low Demand for NGLs in Marcellus/Utica Region

Click for larger version

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…
Continue reading

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…
Continue reading

Southpointe Event Focuses on M-U NGL Storage Hub

Yesterday the second annual Appalachian Storage Hub Conference convened at the Hilton Garden Inn Pittsburgh/Southpointe. Topic A (and B and C) was the proposed $10 billion NGL storage hub, which we’ve written about in the past (see our stories here). When you drill for one hydrocarbon, like natural gas (methane), you inevitably get other hydrocarbons coming out of the ground along with it. In southwestern PA, the northern panhandle of WV, and eastern OH, those other hydrocarbons are NGLs–natural gas liquids–including ethane, propane, and butane. NGLs are key to the petrochemical industry. Ethane can be chemically “cracked” to produce ethylene, or raw plastics. Shell is building a $6 billion ethane cracker in Monaca (Beaver County), PA, near Pittsburgh. A second ethane cracker is likely to get built in Belmont County, OH–by PTT Global Chemical. Manufacturing companies then locate near the crackers so they can use the ethylene pellets created by the crackers in their own manufacturing processes. It’s all connected. And right in the center of it, at the nexus, is the ability to store ethane and other NGLs. Without storage, you have to immediately use the NGLs as soon as they are produced. Which doesn’t often happen. There is a mismatch–a delay between the time NGLs are produced and the time they are needed at the plant for cracking/processing. A storage hub addresses that issue and makes everything work. A storage hub is so critical that an entire one-day event was organized to talk about it…
Continue reading

Appalachian NGL Storage Hub Conference June 6-7 in Pittsburgh

MDN has previously written about the Appalachian NGL (natural gas liquids) Storage Hub, a $10+ billion infrastructure project with no specific location identified as yet, but West Virginia often named (see M-U’s Next Mega Project: $10B Appalachian Storage Hub). An upcoming conference dedicated solely to the the Storage Hub is coming to the Pittsburgh area June 6-7. The Appalachian Storage Hub Conference is sponsored by our friends at Shale Directories (Joe Barone), along with TopLine Analytics (Tom Gellrich), in Canonsburg at the Hilton Garden at Southpointe. June 6th will see a cocktail reception in the evening and June 7th is the full conference. The conference will answer questions like, What in the world is a storage hub and why does the Marcellus/Utica need one? What are state governments doing to attract this project, and what remains to be done? What kinds of investment opportunities exist? And, How does our region compare with the Gulf Coast? If you have an interest in petrochemicals and NGLs like ethane, you need to attend this event. Oh! And did we say, seating is very limited? It is, so now is the time to act if you want to attend. There’s a few remaining slots…
Continue reading

What’s Happening with Utica Marcellus Texas Pipeline (UMTP)?

What’s happening with Kinder Morgan’s $4 billion Utica Marcellus Texas Pipeline (UMTP) project? In February MDN told you that Kentucky antis went to court to try and block a plan by Kinder Morgan to convert a portion of the Tennessee Gas Pipeline (TGP) that 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 (see Kentucky Antis File Lawsuit to Stop TGP NGL Pipe Reversal). We told you in April that a Kentucky county has also gone to court to try and stop the pipeline reversal (see Kentucky County Suing to Stop TGP from Reversing Pipeline for NGLs). The pipeline reversal is part of the UMTP project. UMTP involves converting 964 miles of natural gas service on TGP (to flow NGLs), the construction of approximately 200 miles of new pipeline from Louisiana to Texas, and new storage capacity and laterals in Ohio. UMTP was originally slated to be done later this year. Since Kinder hasn’t even gotten to first base with this project, that ain’t gonna happen. What’s the holdup? And, will UMTP ever get built?…
Continue reading

The Different Ways Range and CNX Dealt with ME1 Pipeline Outage

Now that the Mariner East 1 (ME1) NGL (natural gas liquid) pipeline is back up and running, Marcellus/Utica producers are breathing a sigh of relief–at least, Range Resources, the primary customer for the pipeline, is. Following sinkholes that developed while Sunoco Logistics Partners was drilling for the Mariner East 2 (ME2) project, a portion of ME1 was exposed to open air in Chester County, PA, which prompted the state Public Utility Commission to shut down ME1 in early March (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Range sends 20,000 barrels a day of ethane and propane through ME1. The closure sent them scrambling for alternatives (see Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown). CNX Resources is also a customer using ME1, but much less so than Range. It took two months, but the PUC finally allowed ME1 to restart last week (see Sunoco’s ME1 Pipe Restarts, ME2 Pipe Pays Another $355K in Fines). Range and CNX coped with the ME1 closure in very different ways…
Continue reading

Kentucky County Suing to Stop TGP from Reversing Pipeline for NGLs

Rowan County, KY

In February MDN told you that Kentucky antis went to court to try and block a plan by Kinder Morgan to convert a portion of the Tennessee Gas Pipeline that flows natural gas from the Gulf Coast to the northeast, to reverse the pipeline and flow natural gas liquids from the Marcellus/Utica region to the Gulf (see Kentucky Antis File Lawsuit to Stop TGP NGL Pipe Reversal). The reversal is part of a $4 billion project called the Utica Marcellus Texas Pipeline (UMTP) project. The first step in reversing the existing pipeline was approved by the Federal Energy Regulatory Commission last October (see FERC Advances Plan to Reverse Part of TGP to Haul M-U NGLs to Gulf). Antis in Kentucky got their bluegrass knickers in a twist over FERC’s action. They filed a request for “rehearing” of FERC’s decision, which is the first step in a process that typically ends up in court. Normally FERC has 30 days to decide on a rehearing, however, they have a tactic they call a “tolling order” which allows them to extend the amount of time to make a rehearing decision–indefinitely. FERC pulled out the tolling order card and played it last November (see FERC Frustrates Kentucky Radicals Seeking to Stop TGP Pipe Reversal). The ticked-off antis filed a lawsuit challenging the FERC tolling order. While all of that continues to play out, one of the Kentucky counties along the TGP route–Rowan County–is filing its own lawsuit to stop the reversal and conversion of the pipeline. No, Rowan County has no standing to file such a lawsuit, but apparently they’ll need to learn that the hard way…
Continue reading

ME1 Pipeline Shutdown in M-U Causing Propane Prices in TX to Drop

Propane is one of the NGLs (natural gas liquids) that come out of the ground along with natural gas and oil–especially in “wet gas” areas like southwestern PA, eastern OH, and the northern panhandle area of WV. Ethane and propane have been flowing through the converted Mariner East 1 (ME1) pipeline for more than year–hauling propane (and ethane) from southwest PA all the way to the Marcus Hook refinery near Philadelphia. At Marcus Hook, the propane is loaded onto ships and sent around the world. The world is an important market for our propane. However, ME1 was suddenly switched off on March 3 by order of the Pennsylvania Public Utility Commission (PUC) after a sinkhole opened up under the pipeline, exposing some of the bare steel to the open air (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Sunoco Logistics Partners, the owner of ME1, is building a new set of pipelines called Mariner East 2 (ME2) close to the existing ME1. ME2 will also haul ethane and propane to Marcus Hook, greatly expanding capacity. As part of their construction work in Chester County, several sinkholes developed leading to the shutdown of ME1. You might think if the supply of propane suddenly stops, prices would go up. But that’s not what happened. Because the propane ME1 was hauling to Marcus Hook was exported, that supply is now staying here at home. The effect has been to drive DOWN the cost of propane–in Texas!…
Continue reading

FERC Rejects Blue Racer Midstream Plan to Change NGL Pipe Rates

We have to confess this story is a bit complex to understand. We will take a stab at making the complex understandable. Blue Racer Midstream has a subsidiary called Blue Racer NGL Pipelines LLC. The subsidiary operates the G-150 pipeline system, which provides batched propane and butane service. G-150 currently, located in West Virginia, connects a Natrium, WV processing plant to the TE Products Pipeline Co. (TEPPCO). The G-150 pipeline will also have a connection to the Mariner East 2 Pipeline when it goes into service, theoretically in June of this year. Currently the G-150 is flowing about 6,300 barrels per day of product through it–only 20% of its capacity. When the connection with ME2 is up and running, Blue Racer says it can handle 30,000 bbl/d through the G-150. However, Blue Racer itself signed up for most of the capacity (27,000 bbl/d). Blue Racer recently asked the Federal Energy Regulatory Commission (FERC) to allow it to have two different rate structures–a lower rate for “committed” shippers (Blue Racer itself with its 27,000 bbl/d) and a higher rate for uncommitted shippers. FERC rejected the request pointing out that existing shippers with contracts–namely Chesapeake Energy–would be left out in the cold in favor of Blue Racer moving its own volumes at lower prices. Yes, it’s complicated. Bottom line, Blue Racer can’t do what it wants and has to go back to the drawing board…
Continue reading

Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown

MDN reported yesterday that due to underground horizontal direction drilling (HDD) in Chester County, PA (near Philadelphia) for the Mariner East 2 (ME2) Pipeline project, a third sinkhole had developed (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). ME2 is being built close to the existing Mariner East 1 (ME1) pipeline. The sinkhole exposed a portion of the ME1 pipeline to the open air. Not a good situation, which is why the state Public Utility Commission has temporarily shut down the propane and ethane flowing through ME1. The shutdown is for 10-14 days. Problem is, both Range Resources and CNX Gas pump propane and ethane through ME1. With the shutdown, both companies are “scrambling” to find alternative means to get their NGLs to market…
Continue reading

Final State Permits Expected Soon for OH Mountaineer NGL Storage

Some new details have emerged with respect to the Mountaineer NGL Storage facility proposed for Monroe County, OH, located just across the river (and border) from West Virginia. What did we know about the proposed project? The Colorado company behind the 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. Last November, we learned there is a construction delay until mid-this year (see Yet Another Update on Stalled Mountaineer NGL Storage Proj in OH). Why the delay? Because of regulators in Ohio. At the “Emerging Opportunities Ohio Valley Conference” held yesterday in WV, Mountaineer NGL president David Hooker provided an update and some new-to-us details about the project. He said his company will file paperwork for “final state permits” in March. While “not a lot has changed” with Ohio regulators dragging their feet, here’s something that has changed. In order to pump out the NGLs from the underground storage cavern, brine (salty water) will be pumped down the bore hole, to force the NGLs back up to the surface. Original plans called for a single brine pond to store the liquid when it’s at the surface, waiting to be used. New plans call for two brine ponds. So far Mountaineer has spent $20 million on the project. If everything gets approved and demand develops as expected, the plan is to spend up to $130 million, which will build enough infrastructure to store 3 million barrels of NGLs. However, there is also a stretch goal of investing up to $500 million to store 10 million barrels. Here’s an update from our friends at Kallanish Energy, who attended yesterday’s event…
Continue reading

UTOPIA has Arrived! KM OH Pipe Flowing Ethane to Canadian Cracker

UTOPIA Pipeline route – click for larger version

In January 2016, Kinder Morgan (KM) committed to building the UTOPIA (Utica To Ontario Pipeline Access) pipeline, a 12-inch ethane pipeline that will run ~240 miles across the state of Ohio where it will connect with another pipeline and flow ethane all the way to a cracker plant in Canada (see Kinder Morgan Ready to Move Forward with UTOPIA East Pipeline). However, all was not utopia with UTOPIA–some Ohio landowners got a bumble bee in their bonnet and refused to deal. KM first sued them using eminent domain, then decided to alter the route instead and signed leases with more reasonable landowners (see UTOPIA East Pipe Re-Routes Around OH Antis, Drops Eminent Domain). Last June, KM’s vice president of public affairs, Allen Fore, said UTOPIA was under construction and due to go online in January 2018 (see UTOPIA NGL Pipeline Under Construction, Should be Online Jan 2018). And so it has! Yesterday KM announced UTOPIA is up and running and flowing ethane from the Utica/Marcellus all the way to a cracker plant in Canada…
Continue reading