Growing volumes of natural gas liquids (NGLs) produced in the Marcellus and Utica need to find a market – inside or outside the region. Getting them to outside markets involves transportation by pipeline, rail, truck or barge. Local demand is either from traditional “legacy” customers that consume propane, butane and natural gasoline or from new ethane-consuming projects such as proposed ethylene crackers. What’s already been done to address the demand side of the NGL equation, and what’s being planned? Today, we conclude our series on NGL infrastructure in the Upper Ohio River Valley with a look at where all those NGLs will be heading.
NGL production in the Marcellus and Utica is expected to top 800 Mb/d within a year or so and may top 1 MMb/d or even 1.2 MMb/d by the 2020 if the recent pullback in drilling is reversed. Given that it can be challenging to store NGLs (ethane in particular) and that the region has little in the way of NGL storage capacity, the increasing supply of NGLs from southwestern Pennsylvania, northern West Virginia and eastern Ohio needs to “join together with demand” (as our series title has been hinting at). Of course some ethane can be “rejected” into the natural gas, but there are BTU limits to pipeline-quality gas—and besides, gas/NGL producers would prefer to sell their ethane to petchem producers, assuming the price is right. The question is, where will the demand for Marcellus/Utica-sourced NGLs come from? Local crackers? Gulf Coast crackers? Export markets? All of the above?
Our series has provided a step-by-step review of the Marcellus/Utica region’s emergence as an NGL production powerhouse. We started in Episode 1 with a description of the region’s history and hydrocarbon potential, followed that up with more detail in Episode 2, then took a look (in Episode 3) at the major natural gas pipelines already criss-crossing the region that are being reworked and expanded to provide increased gas takeaway capacity. In Episode 4 and Episode 5 we considered the gas processing and fractionation assets of MarkWest Energy Partners, and in Episode 6 how the elements of MarkWest’s “machine” are designed to function efficiently, even in the event of NGL-takeaway disruptions. Then, in Episode 7, we looked at the NGL-related assets of Blue Racer Midstream, and in Episode 8 we examined the assets of five other NGL players in the Marcellus/Utica. Throughout the series, we’ve been aided in our discussion gets a big assist by RBN Energy’s new Pipeline GIS mapping function, which allows users to zero in on specific assets or groups of assets, and to add in (or take out) layers of assets—all with the idea of helping to understand how the region’s midstream assets fit together.
The last pieces of the region’s NGL puzzle are takeaway capacity and local consumers, whose combined receipt of NGLs needs to roughly match the volumes being produced (minus any ethane being rejected into outlet gas). First, let’s look at pipelines. There are a total of seven existing or planned NGL takeaway pipelines out of the Marcellus/Utica, some ethane-only, some capable of moving batches of ethane and other NGLs, and one planned system focused on moving mixed or “Y-grade” NGLs.