PITTSBURGH—If the United States has been called the Saudi Arabia of NGL, then the center of the action is the Marcellus-Utica Shale where burgeoning natural gas and liquids production keeps midstream operators hopping.
“The marketing opportunities are phenomenal if we get the right infrastructure in place,” said Jim Crews, vice president of business development for MarkWest Energy Partners LP, speaking at Hart Energy’s recent Marcellus-Utica Midstream Conference.
The panel speakers agreed there will be so much ethane production in the region that it could accommodate possibly as many as six ethane crackers, in addition to the one Shell is building in southwest Pennsylvania.
It’s been a little over a year since Marathon Petroleum Corp.’s midstream master limited partnership, MPLX, acquired MarkWest. The deal combined Appalachian NGL marketing infrastructure with growing supply and a lower cost of capital. Even in the midst of a downturn, the companies have been expanding. Half a dozen new or expanded projects, including a new fractionator and de-ethanizer, are coming onstream in 2017 in the Marcellus region.
Fractionation volumes are expected to rise 15% to 20% this year. The partners have contracts with 14 Marcellus and 10 Utica producers. The opportunity exists to spend $500 million to $1 billion in ethane recovery units over the next five years.
“Our processing supports over 20 producers and some 8 million acres are dedicated to that in the tri-state region. We are making 20% of all U.S. NGLs right here in this Marcellus region,” Crews said.
MarkWest employs 850 people in Ohio, West Virginia and Kentucky.
Crews’ counterpart reiterated that in 2016 when many companies were pulling back and deferring projects, Marathon was not. “We’ve committed over $500 million in new construction,” said Shawn M. Lyon, vice president of operations for Marathon Pipe Line LLC. “We’re excited about a lot of projects we have in progress in 2017.”
Already online is MPLX’s Cornerstone Pipeline, the first Utica line dedicated to liquids; it moves NGL from eastern Ohio’s Utica production to points west. Completed in October 2016, it’s moving condensate and liquids to storage terminals and to Marathon Petroleum’s refinery in Canton at the rate of 180,000 bbl/d. It was upsized to 16 inches diameter to accommodate anticipated production growth in the region.
Lyon said it provides optionality to area producers to move their liquids to local, regional and Canadian markets.
The Hopedale pipeline connection was up and running in December 2016, linking the Marcellus and Utica to the Midwest.
“We’re keenly interested in liquids,” said Crews, who added that about half the NGL stream in the region is ethane.
“We swim in the global market and let that market dictate the opportunities. It really depends on supply and demand, and fortunately, MarkWest helps us with that even more,” said Crews.
“We will produce 5 MM gal/day of NGL in the U.S., more than the rest of the world combined, so the challenge will be to get the workforce we need to build enough infrastructure, and to recruit manufacturing to come here,” said Lyon. “The opportunity is definitely there.”
Leslie Haines can be reached at email@example.com.