Tag Archives: natural gas liquids

MATCOR Offers Take on Natural Gas Liquids Production and NGL Transportation

“There is much discussion about the abundance of natural gas deposits in Marcellus Shale, and there is tremendous focus in extracting this precious resource. However, the industry’s ability to get this product to the end user is impacted by the infrastructure that currently exists.

“While rail is a means to transport natural gas, MATCOR is working with a growing number of midstream companies in expanding transmission and distribution piping networks. The key is to get product to market in a cost-effective and safe manor, and MATCOR’s cathodic protection products and services help ensure any new pipeline, regardless of the product it delivers, is in compliance and protected from corrosion.”

John Rothermel, PE

Vice President of Sales, MATCOR

Pipelines Planned for NGL Transportation Through Central Pennsylvania

At least one company is looking to take advantage of the rapid growth of natural gas liquids production from two of the largest shale regions in the nation.

Sunoco Logistics, a Philadelphia-based company that transports, terminals, and stores crude oil and refined petroleum products, recently announced that it was surveying land for a new pipeline, dubbed Mariner II East, that would connect production of natural gas liquids (NGL) from the Marcellus and Utica  shale regions of Pennsylvania, Ohio, and West Virginia to one of the company’s oil and diesel tank farms outside of Mechanicsburg.

The company also has plans to convert its existing Mariner East I pipeline, which used to carry oil and diesel fuel west, so that it carries propane and ethane east to its facility in Marcus Hook, which had also been idled.

The company bought the refinery from the former Sunoco Co. earlier this year for $60 million and is spending an unspecified amount of money to upgrade it and bring it back online as a natural gas liquids production refinery.

Sunoco Logistics is betting on the continued growth of natural gas production, of which NGLs like propane and ethane are byproducts. Natural gas production has increased in recent years thanks to hydraulic fracking, which has resulted in a larger supply that has driven prices down and has therefore, like a circle, created bigger demand for natural gas.

As a result of this process, NGL production has climbed during the last four years from 50 million to 70 million barrels per month. But, without greater avenues for NGL transportation, the increased production is moot.

Sunoco Logistics says that its plan to build a new NGL transportation pipeline, and convert an old pipeline for NGL transportation, will help create a northeast NGL hub in Marcus Hook that will help meet the demands of NGL producers and local and overseas consumers.

The Mariner East projects are only a few of the pipelines being planned by Sunoco Logistics. The company has roughly a dozen oil and gas projects on the books over the next 12 months at a cost of $1.3 billion, four times what it spent on capital expenditures each of the last four years.

MATCOR offers cathodic protection safety products and services to companies like Sunoco Logistics, which require cathodic protection equipment to maximize safety, efficiency, and capital investment in their pipeline projects.

Further Reading

Sunoco Logistics Plans Marcellus, Utica Pipeline Through Susquehanna Valley,” The Patriot News, Nov. 21, 2013.

Summit deal would expand local gas pipeline holdings

Summit Midstream Partners, LLC, is seeking to vastly expand its local (Colorado) and overall natural gas pipeline holdings with a proposed $207 million acquisition.

Summit announced Friday that it has agreed to spend that amount to acquire ETC Canyon Pipeline, LLC, which gathers and processes natural gas in the Piceance and Uinta basins in Colorado and Utah.

Summit has reached the agreement with La Grange Acquisition, L.P., a subsidiary of Energy Transfer Partners, L.P. The purchase would entail more than 1,600 miles of pipeline, 44,000 horsepower of compression facilities, processing facilities with a total capacity of 97 million cubic feet of gas per day, and two natural gas liquids injection stations.

The deal is subject to regulatory approvals and other closing conditions, and is expected to be consummated in the fourth quarter of this year.

Last year, in its initial expansion to the Rockies, Summit agreed to spend $590 million to buy part of the Piceance Basin distribution systems of Encana USA. The deal consisted of 260 miles of pipeline and 90,000 horsepower of compression facilities in the Rifle-Parachute area. The facilities transport 500 million cubic feet of gas per day.

Summit is based in Dallas and has offices in Denver, Atlanta and Houston. It also has holdings in the Fort Worth Basin, which includes the Barnett Shale formation in Texas.

The company was formed in 2009 by members of its management and funds controlled by Energy Capital Partners II, LP, a private equity firm. That firm sold an interest in Summit to GE Energy Financial Services last year.

Last month, Summit filed for an initial public stock offering of about $301.9 million to support its growth. Summit said in a U.S. Securities and Exchange Commission filing that its holdings as of June 30 included about 385 miles of pipeline and 147,600 horsepower of compression, and its systems gathered an average of about 909 million cubic feet of natural gas per day during the first half of the year.

SOURCE: http://www.gjsentinel.com/breaking/articles/summit-deal-would-expand-local-gas-pipeline-holdings/

 

Pittsburgh-area site is chosen for major refinery

Shell Oil Co. has chosen a site near Pittsburgh for a major, multi-billion-dollar petrochemical refinery that could create thousands of construction jobs and provide a huge economic boost to the region.

Dan Carlson, Shell’s General Manager of New Business Development, said Thursday that the company signed a land option agreement with Horsehead Corp. to evaluate a site near Monaca, about 35 miles northwest of Pittsburgh.

The so-called ethane cracking, or cracker, plant would convert ethane from bountiful Marcellus Shale natural gas liquids into more profitable chemicals such as ethylene, which are then used to produce everything from plastics to tires to antifreeze.

The plants are called crackers because they use heat and other processes to break the ethane molecules into smaller chemical components. A cracker plant looks very similar to a gasoline refinery, with miles of pipes and large storage tanks. The final complex could cover several hundred acres.

Ohio, West Virginia and Pennsylvania had all sought the plant and offered Shell major tax incentives. Monaca is about 15 miles from both the Ohio and West Virginia borders, so workers in all three states are likely to benefit.

Shell has said that it could spend several billion dollars to build the plant, and that the complex would attract a wide range of industry and suppliers to nearby locations. But actual construction is still years away. The company said the next steps are environmental and design studies and further economic analysis, then permits.

One lifelong resident of the Pennsylvania township almost broke down on hearing the news.

“Oh my God. It makes me want to cry. That’s just the best news,” said Christie Floyd-Gabel, Potter Township’s secretary.

It’s also an unexpected turn for Horsehead’s zinc factory on the banks of the Ohio River, which is currently operating. In September the company announced plans to shut the factory by 2013 and relocate to North Carolina, along with most of its 600 workers.

“That was a major loss,” Floyd-Gabel said of Horsehead’s plans to depart, adding that’s it’s amazing that another major corporation may come in to replace Horsehead.

Ali Alavi, a Horsehead spokesman, said the company would have to vacate the over 300-acre site by April 30, 2014, under the terms of the option agreement with Shell.

Shell said the Horsehead site had the mix of resource and transportation attributes “to accommodate facilities for a world scale petrochemical complex and potential future expansions.”

The American Chemistry Council, in a report last year, estimated the new petrochemical complex could attract up to $16 billion in private investment. Shell estimated the core plant could employ several hundred people and create up to 10,000 construction jobs.

Gov. Tom Corbett said at a press conference that the plant could lead to the “renewal of a significant manufacturing base in southwestern Pennsylvania,” but cautioned that the announcement is “the first pitch in a nine-inning game.”

If the plant is built, Shell would be able to supply it partly with gas from its own wells, giving it more control over supply and costs. The company paid $4.7 billion in 2010 for drilling rights to about 650,000 acres in the region.

That also means that Shell could benefit even from the low wholesale prices that have worried some gas drillers, since a cracker plant’s raw material costs would be lower.

Labor leaders welcomed the announcement.

Frank Snyder, secretary-treasurer for the Pennsylvania AFL/CIO, said it represented “some of the most positive economic news for the working families of western Pennsylvania in over a generation.”

“Indeed, all of Pennsylvania can have hope this spring in the anticipated partnership between a world class workforce and a world class business,” said Snyder.

Shell’s choice may also represent an indication of just how strongly the industry feels about the vast gas reserves in nearby underground shale rock formations, given the multi-billion dollar commitments it has made. Carlson told The Associated Press that any plant must be economically competitive with existing cracker plants in Louisiana and Texas, and even with international plants.

The Marcellus Shale, which lies thousands of feet underground, has attracted a rush of major oil companies, who have drilled almost 5,000 new wells in the last five years. The Marcellus covers large parts of Pennsylvania, New York, Ohio and West Virginia, and drillers have also started to tap the adjacent, deeper Utica Shale formation.

Ohio and West Virginia officials had made all-out efforts to attract the plant. Last year West Virginia Commerce Secretary Keith Burdette said, “We intend to compete with the last breath in our body to attract one or more crackers,” and both West Virginia’s and Ohio’s governor flew to Houston to meet with Shell officials.

West Virginia offered to slash property tax rates for 25 years in exchange for at least $2 billion worth of investment. Pennsylvania offered 15 years of tax breaks and Ohio also reportedly courted Shell with major incentives.

Corbett said he can’t disclose the full details of the tax breaks Shell has been offered because of a confidentiality agreement, and because negotiations are continuing.

George Jugovic, president of the environmental group PennFuture, said it’s still researching the possible impacts of a cracker plant.

Several other companies are also reportedly considering building similar petrochemical plants in the region.

SOURCE: http://www.philly.com/philly/business/20120315_ap_pittsburghareasiteischosenformajorrefinery.html

$520 million Marcellus Lateral pipeline project in doubt

A $520 million pipeline project thought to have the potential to support 2,500 Ohio construction jobs might be dead.

The Ohio Power Siting Board, the body that regulates major utility projects in Ohio, rejected the application for the Marcellus Lateral Pipeline more than a year ago. Kinder Morgan, a pipeline developer, owner and operator out of Houston, has made no official moves on the project since it submitted that application in November 2010.

The 16-inch pipeline was to snake 240 miles under Ohio, from the border with the West Virginia panhandle to a connection with larger pipeline just west of Toledo. It was designed to carry natural gas liquids from the Marcellus Shale formation, a layer of rock rich in oil and gas that sits underneath much of western Pennsylvania, West Virginia and the border counties of Ohio.

Its path would have crossed 15 Ohio counties, including Muskingum, Coshocton, Knox, Morrow, Marion, Crawford and Sandusky.

This past spring, the Bowling Green Sentinel-Tribune and Mount Vernon News quoted a Kinder Morgan spokesman as saying the project still was a go and to expect construction by the end of 2011. The company would first need to get approval from the siting board, which it has not sought, a board spokesman said.

When asked to comment about the project’s status, Kinder Morgan spokeswoman Emily Mir wrote: “We continue to evaluate a number of projects in the Marcellus area but do not have any definite information at this time on the lateral project other than as part of our re-evaluation we are withdrawing our application for the project.”

She declined to answer further questions.

Dale Arnold, director of energy policy for the Ohio Farm Bureau, had been conducting educational meetings with bureau members on pipeline issues in advance of the Marcellus Lateral Project.

He said the wording of Kinder Morgan’s statement suggests it is moving on to something else. Arnold said he has seen alternative energy projects (also governed by the siting board) pulled in the same manner.

“From my experience on work with wind and solar projects, when a company withdraws an application, they are looking at something entirely different,” he said.

The state is “still considering the application active, but just delayed,” said Matt Butler, spokesman for the Public Utilities Commission of Ohio, which oversees the siting board.

As of Friday, Kinder Morgan had made no filing to withdraw its application, which would close the case.

The application was deemed incomplete in 2011 because it failed to include ecological data and enough detail on an alternative route.

Butler said the commission last heard from Kinder Morgan in the fall of 2011. The company relayed it was evaluating options at that point, he said.

Local leaders in the path of the pipeline are curious about Kinder Morgan’s plans.

Jenny Vermillion, a commissioner from Sandusky County, said her office had tried contacting the company in December, but had no success.

Jim Porter and Steve Douglass, commissioners in Muskingum and Guernsey counties, respectively, say they haven’t heard anything new about the project.

“They have not talked to us for a year of maybe longer,” Douglass said.

Douglass said Kinder Morgan had almost daily contact with Guernsey’s county engineer when the Rockies Express Pipeline, a multi-billion dollar interstate pipeline that was built in Ohio in 2009, was in construction.

The pipeline plan was announced by Kinder Morgan in April 2010. At that time, the timeline called for construction to begin in July 2011 and finish one year later.

In a year-end report to investors, filed a month after its application was submitted to the power siting board, Kinder Morgan talked of the need to “continue to pursue commercial agreements with shippers.”

The company, according to an October 2010 investor presentation, was seeking commitments from producers that they would use the lateral. Combined, Kinder Morgan was waiting for a promise of at least 25 million barrels per day for 10 years before it moved forward.

Richard Kinder, chairman and CEO of the company, told analysts during a conference call earlier this month about no fewer than five projects — costing more than half a billion dollars — slated to improve the company’s liquid products transportation. No mention was made of the Marcellus Lateral.

Its biggest investment this year is likely to be the expected closing of a $38 billion deal to buy rival El Paso. El Paso operates a gas pipeline near Glouster that was the source of an explosion that destroyed three homes and a barn and damaged a second barn in November.

SOURCE: http://www.montgomeryadvertiser.com/article/BA/20120128/NEWS01/201280305/-520-million-natural-gas-pipeline-project-doubt?odyssey=nav%7Chead