WHEELING - The ATEX Express - a 1,230-mile pipeline - will send about 190,000 barrels of ethane daily from the local natural gas producing region to Texas.
As officials from West Virginia, Ohio and Pennsylvania wait to see which state will get Royal Dutch Shell's multibillion-dollar ethane cracker, a pipeline project will soon send ethane produced in those states to the Gulf Coast to be cracked.
Chesapeake, the Upper Ohio Valley's largest active gas driller, will be among the companies sending the ethane south via the Appalachia to Texas pipeline, also known as ATEX Express. The pipeline's owner is Enterprise Products Partners.
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Plants similar to this one at the Shell Eastern Petrochemicals Complex project in Singapore should soon be headed to West Virginia, Pennsylvania or Ohio, as Shell officials are set to announce which state will land an ethane cracker in early 2012. At the same time, a pipeline project will send 190,000 barrels of ethane from the three states to the Gulf Coast.
Enterprise said the pipeline will originate in Washington County, Pa. The first leg of the system will involve construction of about 595 miles of new pipeline extending westward to a point in Missouri. The pipeline network will then run southward into Texas.
Enterprise and Chesapeake officials announced in November that Chesapeake would sent 75,000 barrels of ethane from the Marcellus and Utica shales to Texas. However, Enterprise still needed to secure additional ethane commitments at that time to see the pipeline built.
Enterprise announced Tuesday that it had received additional "sufficient transportation commitments" to support the pipeline, which the company hopes to have in service by early 2014. Construction on the pipeline has not started, but the company is securing right-of-way agreements. The pipeline is expected to send 190,000 barrels of ethane daily from the local region to a natural gas liquids storage complex at Mont Belvieu, Texas.
Whether this plan will impact Shell's cracker plant - or other potential cracker plants in West Virginia, Ohio and Pennsylvania - is unclear. Dan Carlson, general manager of new business development for Shell, said the facility the company plans to announce soon would consume 60,000-80,000 barrels of ethane per day.
Enterprise officials said the ATEX Express project will give ethane producers "direct or indirect access to every ethylene plant in the United States."
"The willingness of shippers to commit to a term of at least 15 years reflects the long-term potential of shale development in the Appalachian region and provides us with the assurance necessary to build the midstream infrastructure that will facilitate further development of this important domestic resource," said Michael Creel, president and chief executive officer of Enterprise.
In addition to ethane, other natural gas liquids produced in the "wet" Marcellus and Utica shale gas are propane, butane and pentane. These elements must be stripped from the methane natural gas at processing plants so the methane can be sold by utility companies.
Caiman Energy - the company operating the gas processing plant on U.S. 250 near Cameron - and Range Resources are also planning to send Marcellus and Utica ethane out of the Ohio Valley. Caiman and Range have committed to send ethane to Canada for use by the Nova Chemicals company at a cracker located there. Both companies will transport the ethane to Sarnia, Ontario via the Mariner West Project pipeline project developed by Sunoco.
Kurt Dettinger, general counsel for West Virginia Gov. Earl Ray Tomblin, has said state officials anticipate generating 270,000 barrels of ethane daily at peak production. Even if Chesapeake and Caiman ship the ethane away from the state in the planned amounts, this would leave at least 95,000 barrels of ethane per day to support a Mountain State cracker.
Officials in Ohio and West Virginia realize the value of the ethane cracker, as leaders in both states are offering Shell substantial tax incentives to attract the plant. West Virginia Commerce Secretary Keith Burdette said the project could lead to as much as a "$5 billion" investment for the state, with the project supporting seven indirect jobs for every one of the direct chemical jobs. Ohio State Sen. Lou Gentile, D-Columbiana, also recognizes the value of a cracker plant, as he recently sent a letter to Shell encouraging the company to invest in the Buckeye State.