DOE report lists benefits from developing Appalachian ethane storage

Development of an Appalachian methane storage and distribution hub would provide an important market for low-cost natural gas from the nearby Marcellus and Utica shales while attracting petrochemical projects to an area outside the Gulf Coast, where 95% of existing US capacity now is concentrated, a US Department of Energy report to Congress suggested.

Development of an Appalachian methane storage and distribution hub would provide an important market for low-cost natural gas from the nearby Marcellus and Utica shales while attracting petrochemical projects to an area outside the Gulf Coast, where 95% of existing US capacity now is concentrated, a US Department of Energy report to Congress suggested.

“Our report shows there’s significant potential for the US to grab a large share of the global petrochemical market,” US Sec. of Energy Rick Perry told the National Petroleum Council on Dec. 4. “We have the potential to diversify our petrochemical footprint. Building capacity in Appalachia is a once-in-a-lifetime opportunity.”

The report pointed out that the US now is the world’s largest gas producer, with an additional benefit of more natural gas liquids including ethane—particularly useful in petrochemical manufacturing. Appalachian basin ethane production is projected to continue rapid growth through 2025 to 640,000 b/d, more than 20 times greater than just 5 years ago, the report said.

It said that figures from the US Energy Information Administration show production in Ohio, Pennsylvania, and West Virginia have increased so rapidly that their combined share of total US gas production has jumped to 27% in 2017 from just 2% in 2008.

Gas liquids processing and fractionating capacity in Appalachia has increased rapidly to match this gas production increase, but the Appalachian region currently lacks other physical systems for a hub that would connect supply and demand sources, including NGL storage, the report said.

It examined the potential for a hub there by comparing it to existing hubs that already serve the Gulf Coast and Permian basin, which account for most of the US growth in NGLs outside of Appalachia. In addition, market analysis from the report emphasizes that the development of an Appalachian hub may offer a competitive advantage for the US to increase its global petrochemical market share while not conflicting with Gulf Coast expansion, DOE said.

Contact Nick Snow at nicks@pennwell.com.

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