Wednesday, July 17, 2013

Natural-gas fractionalization plant in W.Va. reflects gas boom, but where will products go?

A $500 million natural-gas processing plant in Wheeling W.Va., "is the first of a rush of new gas processing and fractionation projects springing up around the Marcellus and Utica shale formations on either side of the Ohio River," and "will split methane pipeline gas from heavier hydrocarbons to create a daily 39,000-barrel stream of ethane, propane and other gas liquids," Peter Behr reports for Environment and Energy News. (Photo by Blue Racer Midstream: The company's plant in Wheeling)

Jack Lafield, chairman and CEO of Blue Racer Midstream told Behr that his firm's plant is the largest in the region. With an expected increase in production of natural-gas liquids in the area, Wells Fargo analysts estimated the region could produce 950 million barrels a day by 2018, up from 210 million from last year.

When completed, the plant is expected to employ 40 to 45 people at jobs paying $20 to $30 an hour. That's good news for an area where coal and manufacturing are declining, but elsewhere there is concern among some about where the gas products will go.

Mark Chung, manager of natural-gas liquids analysis for Bentek Energy in Evergreen, Colo., said most of the pipelines that would move the gas are already saturated with supply, Behr writes. Chung told Behr, "Ethane is growing at a tremendous pace, and demand isn't materializing fast enough to soak up. Nobody wants to recover ethane right now." Three new pipelines from the region are being planned, and residents along the proposed route in Kentucky are expressing concern about safety.

"Raymond James & Associates projected last month that long-term investment in markets for natural gas -- ethylene crackers, coal generating plant retirements, ammonia plants, liquefied natural-gas exports and gas shipments to Mexico -- should drive U.S. gas demand higher in the coming decade. But the year-to-year growth they forecast does not accelerate until 2016," Behr reports. (Read more)

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