NGI Shale Daily
Economics Replacing Supply Concerns for Ethane

Wednesday, March 21, 2012

Will ethane production from shale plays in Appalachia support all of the ethane projects proposed for the region?

Potentially, but economics could play a much more decisive factor than supply over the coming decade, experts said Tuesday at the Hart Energy Marcellus Midstream Conference and Exhibition in Pittsburgh.

With two pipelines in the works, an overseas shipping option under discussion and tentative plans for a world-scale cracker in the region, "There is no longer an ethane problem in the Northeast," according to Kristen Holmquist, manager of natural gas liquids for Bentek Energy Inc. The question now is whether production levels will allow all four projects -- and possibly others -- to co-exist in the near term.

At current prices, the internal rate of return in the wet gas corridor of the Marcellus is lower than other liquids-rich shale plays across the county, but it's still above 40%, "not too shabby," Holmquist said.

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