24 March 2010 16:09 [Source: ICIS news]
TORONTO (ICIS news)--NOVA Chemicals and pipeline firm Buckeye remain confident about their planned venture to ship natural gas liquids (NGL) from the Marcellus shale gas basin in Pennsylvania to the Sarnia petrochemicals hub in southern Ontario, even as a potentially rival project emerged this week, they said on Wednesday.
Canadian energy firm Enbridge said on Monday it may build an NGL pipeline from Marcellus to ?xml:namespace>
In February, NOVA and partner Buckeye announced their plan for an NGL pipeline from Marcellus. The NGL would feed NOVA’s ethylene plant at Corunna, near
“Sarnia is the closest demand centre to the Marcellus NGL, and we believe that since there is existing infrastructure in place in Sarnia, including storage and pipelines, that the [NOVA/Buckeye] project is a good one,” NOVA spokesman Greg Wilkinson told ICIS news.
Buckeye spokesman Mark Stockard said his company was aware of Enbridge’s plans but would not say whether the Enbridge proposal could rival the NOVA/Buckeye project. "We see [Enbridge] as a separate project," he said.
Buckeye was in the evaluation phase for its project with NOVA, called Union pipeline, and its success would depend on shipper interest, he said.
The company on 4 March issued a "non-binding open season" to determine shipper interest in the pipeline. If it goes ahead, the pipeline would take about two and a half years to build.
Stockard would not comment on how much NGL the Marcellus basin may hold.
Enbridge said its proposed pipeline would provide “an excellent long term solution” for development of the Marcellus basin.
In particular, it would help Marcellus gas producers obtain greater value for their future NGL production, said Stephen Letwin, Enbridge executive vice president for gas transportation.
Enbridge didn't disclose its NGL reserve estimates for Marcellus, but said it was currently evaluating various routing and market alternatives. The company said it expected to move forward with an open season in the second quarter.
Estimates for available NGL and gas reserves at Marcellus vary widely, thus making it unclear if the two pipeline projects could end up competing against each other for NGL or if there is enough to accommodate two pipelines.
John Cummings, an independent Toronto-based petrochemicals analyst, said Marcellus gas reserve estimates ranged from 2.5bn to 10bn cubic feet/day, illustrating not enough wells have yet been drilled to narrow the range.
As for NGL, Cummings said: “There are rumours that the south western corner of the shale may be so rich in NGL that the gas might not meet gas pipeline specifications – but again not enough data is available to verify the claims.”
If significant amounts of NGL were indeed found in the gas, producers would face decisions on how and where fractionation should take place, he said.
The Buckeye/Nova project to
Nova would clearly have a keen interest in moving the NGL to
However, a potential alternative off-taker from the US chemicals industry could be the LyondellBasell’s cracker at
Cummings warned development of the Marcellus basin may not proceed as fast as producers may wish.
The area was relatively more populated than other gas exploration regions, he said. More recently, US authorities have raised the issue of groundwater contamination from drilling fluids used in shale gas production as a concern, he said.
The Marcellus shale is centred in western
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