1-2-3 - More on MPLX's Plan to Pipe Northeast Condensate and Natural Gasoline

More than four years after the Utica and the “wet” part of the Marcellus became a hot spot for drillers, the field condensate and natural gasoline produced there are still moved to market by barge, rail and truck. A three-part, $500 million plan by MPLX LP and the midstream master limited partnership’s (MLP’s) subsidiaries, now well under way, will enable more efficient pipeline transport of these important hydrocarbons to Midwest refineries, Western Canadian diluent pipelines and other end-users. To hold down costs, the effort involves a creative mix of new and existing pipelines. Today we continue our review of MPLX’s plan with a look at its “Utica Build-Out Projects.”

In Episode 1 of this series we discussed the rise (and recent leveling off) in production of natural gas, natural gas liquids (NGLs) and superlight crude oil (also known as field condensate) in the Utica play in eastern Ohio and the liquids-rich portion of the Marcellus in western Pennsylvania and northern West Virginia. We noted that while most of the market’s attention goes to either natural gas or to lighter NGLs like ethane, propane and butanes, the three-state region produces sizable volumes of natural gasoline (an NGL also known as plant condensate) and of superlight crude (also known as field condensate or lease condensate), both of which are important products that have the potential for value uplift. Plant condensate/natural gasoline is used as a gasoline blending agent, a feedstock for steam crackers (see RBN Drill Down report What’s Crackin’ with Steam Crackers) and as a diluent –– that is, blended into heavy bitumen crudes in Western Canada to reduce viscosity and enable them to flow more easily through pipelines. Among other things, field condensate can be blended into crude oil, run as a feedstock at refineries and condensate splitters (see Dancing in the Dark), or used as diluent. Marcellus/Utica production of field condensate and natural gasoline rose sharply starting in 2013; currently the three-state region is producing about 110 Mb/d of field condensate and about 50 Mb/d of natural gasoline. To date, no pipelines are in place to move them out, leaving field condensate and natural gasoline producers with only three delivery options (tank trucks, rail tankcars, and Ohio River barges), but that is about to change.

While other efforts to develop field condensate and/or natural gasoline pipelines out of the Utica and wet Marcellus have failed or faltered, Findlay, OH-based MPLX –– a master limited partnership (MLP) formed by Marathon Petroleum Corporation (MPC) –– has hung in there, and is finishing up the first part of a three-part pipeline solution. The core element of the plan’s Part 1, whose aim is to pipe a good bit of Marcellus/Utica field condensate to area refineries, is MPLX’s aptly named Cornerstone Pipeline, which includes a new 42-mile, 16-inch-diameter pipeline (longer red dotted line in inset map in lower right of Figure 1) that runs from a condensate stabilization facility near Cadiz, OH owned by MarkWest Energy Partners LP (a subsidiary of MPLX) to MPLX’s East Sparta, OH tank farm, while also connecting to Utica East Ohio Midstream’s (UEO) 30-Mb/d condensate stabilizer and NGL fractionator in Scio (OH) along the way. From East Sparta, Cornerstone runs another eight miles (with 8-inch-diameter pipe; shorter red dotted line in inset map) to MPC’s 93-Mb/d refinery in Canton, OH. Both of the Cornerstone Pipeline segments are scheduled to be online in early October 2016. By the end of 2016, MPLX plans to complete the Hopedale Connection (orange dotted line in inset map), an eight-mile, 16-inch-diameter pipeline that will transport natural gasoline from MarkWest’s Hopedale (OH) fractionator to a Cornerstone interconnection about five miles northwest of Cadiz. Because field condensate and natural gasoline are best kept separate, MPLX plans to transport them in “batches” (see Refined, Piped, Delivered –– They’re Yours for an explanation of how batching works). MPLX’s plan is to run mostly condensate through the pipeline from East Sparta to MPC’s Canton refinery. (The refinery has a 25-Mb/d condensate splitter that today is being 100%-supplied by truck; condensate splitters are simple refineries that process condensate into its component fractions – mostly NGLs, naphtha and distillate or jet kerosene.)

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