MPLX is wrapping up a three-part, $500 million plan to facilitate the pipeline transport of large volumes of field condensate and natural gasoline from the Marcellus and Utica plays to Midwest refineries, western Canadian heavy-crude shippers and other end users. But “wrapping up” may be the wrong phrase. In fact, MPLX sees its Cornerstone Pipeline, Utica Build-Out Projects and other elements of the company’s Midwest pipeline push as part of a larger and continuing effort to deal with remaining inefficiencies in the delivery of Marcellus/Utica liquids to market. Today we review what has been accomplished so far, and what expansions and enhancements to MPLX’s pipeline plan may be in the offing.
It would be difficult (if not impossible) to find anyone who has done more than MPLX (a master limited partnership formed by Marathon Petroleum Corp. (MPC) and its MarkWest Energy Partners unit) to address the challenges of increasing volumes of natural gas liquids (NGLs) and field condensate produced in eastern Ohio’s Utica play and the liquids-rich portion of the Marcellus play in western Pennsylvania and northern West Virginia. As we discussed in our Join Together With Demand Drill Down Report, MarkWest not only developed an extensive portfolio of natural gas processing plants (to separate mixed NGLs from the raw gas stream that emerges at the wellhead) and fractionators (to split mixed NGLs into purity products like ethane, propane, butane and natural gasoline), but also a network of intraregional pipelines to help manage the efficient flow of NGLs — especially ethane, the lightest and most challenging NGL to store and transport. More recently, in Part 1 and Part 2 of our “1-2-3” blog series, we considered MPLX’s plan to more efficiently transport the heavier end of the NGL barrel (namely, natural gasoline; a.k.a. plant condensate or pentane-plus) and field condensate (a superlight crude oil also known as lease condensate) to end users.
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 (or lease) condensate can be run as a feedstock at refineries and condensate splitters (see Dancing in the Dark), blended into crude oil or used as diluent. Production of natural gasoline and field condensate has been rising in fits and starts for a number of years now, particularly since 2013, when producers shifted the focus of their drilling to the Utica and liquids-rich, or wet, parts of the Marcellus so they could supplement their natural gas revenue with the sale of NGLs. According to the Energy Information Administration (EIA), natural gasoline (pentane-plus) production at fractionators in the Marcellus/Utica (that is, EIA’s Appalachia No. 1 Refining District, which includes West Virginia and Pennsylvania, and its Indiana-Illinois-Kentucky Refining District, which — despite its name — includes Ohio) peaked at 56 Mb/d in December 2015 (four times the 14 Mb/d produced in January 2013). It has since sagged, but only slightly (52 Mb/d as of April 2017, the last month for which EIA statistics are available). According to EIA, the Ohio Department of Natural Resources (DNR) and other sources, field condensate production in the Marcellus/Utica now averages more than 100 Mb/d, with about two-thirds of that being produced in Ohio and the rest in West Virginia and Pennsylvania. All this production — 50 Mb/d or so of plant condensate and twice as much field condensate — needs to be moved to market. But until MPLX stepped to the plate, no pipelines had been built to transport them, leaving producers with only three options: tank trucks, rail tankcars and (thanks to the Ohio River flowing through the shale plays) barges that can move these products as far as the Gulf Coast. MPLX and MPC have invested in all of these transportation methods in the Marcellus/Utica.