US Northeast plastics outlook boosted by pipeline approvals
Five pipeline projects in the U.S. Northeast gained approval by the Federal Energy Regulatory Commission (FERC) in October, pushing the potential the Appalachian region holds for the plastics industry closer to reality.
The five projects approved in October, which are designed to increase the delivery capacity from the Northeast’s Utica and Marcellus shales, are:
- Mountain Valley Pipeline: a 2 billion cubic feet per day (Bcf/d), 303-mile pipeline from West Virginia to Virginia
- Equitrans Expansion Project: about 8 miles in pipeline expansions, providing 0.6 Bcf/d from Pennsylvania to West Virginia
- Supply Header Pipeline: a 1.5 Bcf/d, 38-mile pipeline from West Virginia to Pennsylvania
- Atlantic Coast Pipeline: a 1.5 Bcf/d, 600-mile pipeline from West Virginia to North Carolina
- Eastern Shore 2017 Expansion Project: 40 miles in pipeline expansions, providing 0.061 Bcf/d from Pennsylvania to Delaware
Image and data: U.S. Energy Information Administration (EIA)
Being a new major gas producing region, the Appalachia region must have additional gas infrastructure to move gas to markets.
FERC in 2016 approved almost 40 major pipeline projects across the country, covering 1,200 miles, over 14 Bcf/d of new capacity (total national consumption is around 75 Bcf/d), and over $10 billion in new investment.
Most of these pipelines are getting approved in the eastern third of the U.S., with a concentration in the Marcellus and Utica shale states of Pennsylvania, West Virginia, and Ohio.
The October approvals are FERC’s first since February as the federal agency lacked quorum until October.
Shell is likely the first of many to plan petrochemical complexes in the Northeast that will use low-cost ethane from shale gas producers in the Marcellus and Utica basins.
Shell Chemical Appalachia has started construction on its chemicals complex comprising an ethylene cracker with polyethylene (PE) derivatives unit, near Pittsburgh, Pennsylvania.
The facility will be built on the banks of the Ohio River in Potter Township, Beaver County, about 30 miles north-west of Pittsburgh.
Because of its close proximity to gas feedstock, the complex, and its customers, will benefit from shorter and more dependable supply chains, compared to supply from the Gulf Coast.
The U.S. subsidiary of PTT Global Chemical (PTTGC America) is due to make a final investment decision at the end of 2017 for the possible construction of a world-scale 700,000 tonne/year ethane cracker in Ohio.
Earlier this year, the company selected a site. PTTGC America exercised a purchase option on the 168-acre property in Belmont County, Ohio in July.
Brazil’s construction and industrial conglomerate Odebrecht previously explored the construction of a new worldscale ethane cracker in West Virginia with Braskem, but withdrew the plans in 2016, citing economic factors.
News articles in October about a potential LyondellBasell takeover of Braskem has analysts thinking this Northest ethane cracker project could be restored at some point.
The project, "Ascent" would have been on the scale of Braskem Idesa in Mexico. The joint venture, which is 75% owned by Braskem, consists of a 1.05m tonne/year ethane cracker, with three downstream PE units.
Northeast feedstock supply
The U.S. Energy Information Administration (EIA) tracks many hydrocarbon gas liquids (HGL) including natural gas, natural gas liquids (NGLs) such as ethane, propane, butane, and methane and also olefins including ethylene, propylene and butadiene.
In the northeast quad state area of Pennsylvania, Ohio and West Virginia, production of NGLs has grown almost 10-fold over the past four years, but it could have been even higher, according to analysts.
Pipeline-restricted ethane has been stranded in region, with few outlets to market. The region is exporting its ethane to Canada, the U.S. Gulf Coast or Europe. Whatever ethane is not sold is rejected or mixed in with the natural gas that supplies homes and businesses for heating and cooking.
If all the rejected ethane could be used to make plastic instead, the region would have more than enough for several big chemical plants without an increase in drilling activity, according to analysts.
“There is more than enough ethane in the Northeast region now for another two to three world scale crackers,” U.S. Energy Information Administration Industry Economist Warren Wilczewksi said.
At least 150,000 barrels/day of ethane are currently being rejected in the Appalachia region, according to the American Chemistry Council (ACC).
“Increased natural gas production in the region could yield an additional 1.1 to 1.3 billion barrels/day of NGL by 2022, said Martha Moore, Senior Director of Economics and Policy Analysis at the ACC.
The resulting surplus ethane of up to 350,000 barrels/day could support up to five crackers, according to research from West Virginia University.
By Heather Doyle