PipeLine and Gas Technology
Bentek reveals Marcellus ethane study

Monday, September 13, 2010

A new study by Bentek Energy LLC defines the magnitude of the Marcellus shale-gas play’s ethane problem, examines several projects designed to address this issue, and proposes a framework for assessing the viability of each of the options.

Without viable ethane disposition alternatives, producers in the Marcellus shale may be forced to curtail natural gas production, finds Bentek Energy LLC, an energy markets information company based in Evergreen, Colorado.

According to the report, although produced ethane is typically a highly-valued byproduct sold as a feedstock to the petrochemical industry, the Marcellus ethane is viewed as a contaminant that could threaten development plans because it has no nearby demand market.

The problem is exacerbated by the region’s growing production. In Pennsylvania, pipeline receipts increased 400%, from 0.3 billion cubic feet (Bcf) per day in early 2009 to 1.2 Bcf per day in August 2010. During the coming five years, Marcellus production is expected to reach at least 5 Bcf per day with some projections exceeding 10 Bcf per day. Although the high-Btu gas can piped whole to market now, at some point natural gas liquids (NGLs) will have to be extracted. Of the Marcellus NGLs, ethane is the largest by volume.

“In most gas producing regions, high-BTU gas and abundant NGLs are good news,” noted Bentek managing director E. Russell (Rusty) Braziel in a public statement. “NGLs are generally priced significantly higher than natural gas on a BTU equivalent basis, and improve the producer’s profitability at the wellhead. But in the Marcellus, NGLs are a problem for two reasons. First, today there is not enough gas-processing infrastructure to extract all the NGLs from gas in the high-BTU gas regions of the Marcellus. This problem is being addressed by the construction of a number of new gas plants. But these plants are creating the second problem – increasing volumes of ethane in the Marcellus region. There are essentially no markets for ethane in the Northeast U.S.”

Other components, such as propane, is sold into the home heating market, and the butanes and natural gasoline are moved into Northeast refineries. Currently, there are no ethane pipelines or petrochemical plants that use ethane in the Northeast region.

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