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CADIZ -- Even as Royal Dutch Shell proceeds with an ethane cracker north of Pittsburgh and PTT Global Chemical evaluates a similar project at Dilles Bottom, pipeline giant Kinder Morgan moves forward with its Utopia Pipeline to send 75,000 barrels of the natural gas liquid from Ohio to Canada daily.
Now, the Houston, Texas-based company has a partner for its $500 million project, as New York City-based Riverstone Investment Group will acquire a 50 percent stake in the Utopia conduit.
"The Utopia Pipeline will connect growing ethane supply sources in Ohio to the expanding petrochemical market in Sarnia (Canada)," said Don Lindley, president of Kinder Morgan's Natural Gas Liquids, Products Pipelines.
"We are excited to welcome Riverstone as a partner in the Utopia project." The project is supported by a long-term contract with Nova Chemicals Corp."
Kinder Morgan plans to have the Utopia sending up to 75,000 barrels of ethane per day from the Markwest Energy Harrison County facilities to Michigan along a 240-mile path by early 2018. Once in Michigan, the ethane would go onward to Canada for cracking by Nova.
Currently, the Nova facility receives Marcellus and Utica shale ethane via the Sunoco Logistics Mariner West pipeline.
"This is another step toward achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation," Kinder Morgan President and CEO Steve Kean said of the Riverstone deal.
Recently, the U.S. Energy Information Administration projected domestic ethane production to increase by 300,000 barrels daily by next year. With so much ethane drawn from the U.S., particularly in the Marcellus and Utica shale formations, companies are working to profit from the new quantities of the natural gas liquid.
"We look forward to Utopia being a successful project and believe it will lead to other strategic partnerships on future projects," Riverstone Partner Baran Tekkora said.
To construct the Utopia, Kinder Morgan filed numerous lawsuits seeking the right to use eminent domain to clear the path for the pipeline path in both Carroll and Wayne counties in Ohio. However, company Vice President Allen Fore said these cases are "really another step forward in the negotiation."
Officials also agreed to relocate the pipeline from its original path through Harrison County property owner Mick Luber's organic farm.
"The Marcellus and Utica shales have changed the supply system. I think you can anticipate ongoing development in this region," Fore said. "Ethane is a huge component for making the plastics that we use every day."