NGLs | Marcellus Drilling News

Chesapeake, Access & Williams in Complex 3-Way Midstream Deal

December 12, 2012December 12, 2012

bouncing ball Chesapeake Energy has sold off its remaining midstream operations (pipelines, compressors and processing plants) to Access Midstream Partners for $2.16 billion. The sale includes Chesapeake’s midstream assets in the Marcellus and Utica Shale region, along with assets in the Eagle Ford, Haynesville and Niobrara shale plays.

At the same time (keep your eye on the bouncing ball here), midstream giant Williams paid $2.4 billion to buy a 50% stake in Access Midstream. That is, the two deals are connected—Chesapeake to Access, Access to Williams. On paper, Chesapeake sold its midstream properties to Access, but it practice it seems the sale was actually to Williams via Access Midstream. In addition, Williams announced that Chesapeake is “supporting” their effort to build a natural gas liquids (NGL) pipeline from the Marcellus/Utica area to the Gulf Coast.

Brooke County | Hancock County | Industrywide Issues | NGLs | West Virginia

Drillers Ship NGLs from Weirton, WV to Houston via Barge

December 10, 2012December 10, 2012

Good old American ingenuity…Drillers are not waiting for processing plants to be completed or pipelines to come online in order to sell their natural gas liquids (NGLs) from the Marcellus and Utica Shale region. A few weeks ago, one million gallons of NGLs were loaded on a tanker barge originating at the port in Weirton, WV. The barge floated first down the Ohio River, and then the Mississippi River on its way to Houston, TX for processing.

Rusty Braziel Sketches Scenarios for U.S. NGL/Crude Prices

December 5, 2012December 5, 2012

Russell (“Rusty”) Braziel is one of the country’s most respected authorities on energy information and markets. He’s the former vice president of BENTEK Energy (bought out by Platts in 2010). He speaks, he writes, and he’s now President & Principal Consultant at RBN Energy, LLC.

Rusty presented at the LDC NGL (natural gas liquids) Forum in San Antonio yesterday, and he had some interesting things to say about the future of NGL and crude oil prices in the U.S. When Rusty speaks, people listen.

Industry Expert Says NGL Prices are Headed Down

November 15, 2012November 15, 2012

Dawn Constantin, head of partnerships and analytics at BP plc, spoke at the LDC Gas Forum in Toronto earlier this week about what the future holds for the natural gas liquids (NGLs) market. Her analysis? Drillers who thought NGLs (wet gas) were a safe harbor against the low price of methane (dry gas) may not find it so safe after all. Why? Simple economics of supply and demand. Demand for NGLs is not keeping up with the flood of supply coming from places like the Marcellus and Utica Shale.

Constantin said there now exists downward pressure on the price of NGLs, just like there is for dry gas:

Plans to Use Natural Gas to Create $2/Gal Diesel Fuel

October 29, 2012October 29, 2012

A Bloomberg article highlights technology with roots all the way to Nazi Germany will soon be used to convert natural gas into natural gas liquids and into hydrocarbon products including low-price diesel fuel, gasoline and jet fuel.

Dominion $500M NGL Processing Plant in WV to Open in December

October 25, 2012October 25, 2012

Some 903 workers are hard at work in Natrium, WV building Dominion Resources’ new processing plant. Dominion announced they would build a $500 million natural gas liquids processing plant in August 2011 (see this MDN story). Dominion says they are on track to open the facility in December of this year.

Once the plant is done it will process an incoming 200 million cubic feet per day of Marcellus and Utica Shale “wet gas” and separate it into ethane, pentane, butane, propane and other compounds for resale. But the plant is not without controversy. The local trade union is not happy that the contractor building the new plant is only using one-third local workers for the project:

Neighbors Not Happy with MarkWest’s Short Line RR

October 24, 2012October 24, 2012

It’s not all peaches and cream when drilling comes to an area. Industrialization does have impacts—more truck traffic, more noise, higher rents, packed restaurants. Add to that list more railroad traffic. That can be good—MDN loves covering the stories of short line railroads on their way out that suddenly are revitalized.

But sometimes the railroad story has a few bumps. MarkWest Energy purchased an old short line railroad right of way that runs 4 1/2 miles in Mount Pleasant Township (Washington County, PA) a couple of years ago and rebuilt the rails. They recently started running a train along those rails to connect their Houston processing plant with a larger railroad to carry natural gas liquids (NGLs) including propane and butane to market.

Neighbors living close to the rail lines have complained of noise and late night runs:

Shell Volunteers to Pay Local Taxes on PA Ethane Cracker

October 2, 2012October 2, 2012

In order to lure Shell to build its multi-billion dollar ethane cracker plant in Beaver County, PA, the state passed a law granting Shell tax exempt status for the next 25 years. Problem is, the place where they will build the plant currently pays school and town taxes ($344,000 per year) that would disappear under the state plan. So Shell has offered to pay 110% of those taxes over the next 25 years—to avoid a PR problem and to support the local community where it will be doing business for at least the next generation.

Here’s the details:

Mariner East Pipeline to Philly Refinery 100% Committed

September 27, 2012September 27, 2012

Sunoco Logistics Partners announced yesterday the “open season” (the period of time when companies commit to pipeline capacity) for the Mariner East pipeline to deliver natural gas liquids to the Marcus Hook refinery near Philadelphia was a complete success with all existing planned pipeline capacity now spoken for. Mariner East will connect to the currently closed Marcus Hook refinery near Philly which will soon be reopened with a major new investment to convert the plant to refine propane and ethane from the Marcellus Shale in western PA. The processed propane and ethane from Marcus Hook will be sold domestically and exported internationally.

The open season was so successful, Sunoco is considering a second open season (building more pipeline capacity). In a related announcement, Range Resources said they are the anchor shipper for the pipeline (see this MDN story), as well as MarkWest Energy Partners (see this MDN story). From the Sunoco Logistics press release:

Range Announces They’re Main Shipper for Mariner East Pipeline

September 27, 2012September 27, 2012

In a follow-on announcement to Sunoco Logistics Partners (see this MDN story), Range Resources says it is the anchor shipper for the Mariner East Pipeline that will connect western Pennsylvania to the Marcus Hook refinery near Philadelphia. Range announced they’ve signed a 15-year agreement with Sunoco to ship Marcellus Shale natural gas liquids to the Philly refinery. They also announced they’ve signed a 15-year contract to export and sell ethane to INEOS Europe from the Marcus Hook refinery. Range plans to start selling 10,000 barrels per day beginning in 2015 and eventually double that to 20,000 bpd.

Here is the lengthy press release from Range announcing their deal with Sunoco Logistics and also listing other NGL sales agreements Range has negotiated:

MarkWest Announces Commitment for Mariner East NGL Pipeline

September 27, 2012September 27, 2012

Not only has Range Resources announced they will take capacity on the Mariner East natural gas liquids pipeline (see this MDN story), MarkWest Energy Partners also announced they are another one of the customers for the new pipeline. MarkWest intends to ship ethane and propane from their Houston, PA processing and fractionation plant to the newly revamped Sunoco Marcus Hook refinery near Philadelphia where it will be re-mixed and sold, both domestically and internationally (exported).

From the MarkWest press release:

Shell Reaffirms PA Cracker Plant Still Planned, Not Certain

August 15, 2012August 15, 2012

As MDN has previously cautioned, although the proposed ethane cracker plant Shell wants to build near Pittsburgh is looking good, it’s still not a foregone conclusion that Monaca, PA will be the location (see this MDN story). That message of caution was reaffirmed by Shell at an industry conference yesterday, as reported by the Youngstown Business Journal:

MarkWest Signs Deal with XTO to Process NGLs in PA

August 1, 2012August 1, 2012

MarkWest has just signed a deal with XTO Energy (XTO is a wholly-owned subsidiary of Exxon Mobil) to extend MarkWest’s natural gas liquids (NGLs) gathering pipeline in Butler County, PA to XTO’s processing plant. Previously MarkWest announced plans to extend the same pipeline from its Houston, PA complex to the Bluestone complex in Butler County. With this announcement, MarkWest will further extend the pipeline from Bluestone to XTO’s plant.

This deal will grant MarkWest the right to fractionate and market NGLs from XTO. Adding this new pipeline to other recently announced pipelines by MarkWest, when everything is built and running, MarkWest will have 3 billion cubic feet of gas processing capacity and 270,000 barrels per day of fractionation capacity throughout the Marcellus and Utica Shale.

The Shift from Dry to Wet Gas Continues

July 30, 2012July 30, 2012

The Pittsburgh Post-Gazette has a story in today’s edition on the recurring theme that dry gas drilling in the Marcellus Shale is slowing down in Pennsylvania and is shifting to wet gas drilling in the Utica Shale in eastern Ohio and southwestern PA.

Anadarko | Energy Companies | Industrywide Issues | NGLs

The Massive Shift Underway from Dry to Wet Gas Drilling

February 10, 2012February 10, 2012

An article on the SNL Financial website about the “massive shift” from drilling in dry gas (methane only) shale gas areas to the natural gas liquids (NGLs) areas begins this way: