Home Blogs Asian Chemical Connections Looking for ethane? Head West

Looking for ethane? Head West

Business, US
By John Richardson on 13-Sep-2010

By Malini Hariharan

A problem of plenty is building up in the US where the rise of shale gas production could create problems in disposal of ethane. This may sound hard to believe but a new report by Bentek Energy concludes that a big challenge for Marcellus Shale gas producers, located in Northeast US, is to find an outlet for ethane.

“In most natural gas producing regions, ethane is a highly valued byproduct of natural gas production, sold as an important feedstock for the petrochemical industry. But in the rapidly growing Marcellus producing region of the Appalachian basin, ethane is viewed by some natural gas producers as a contaminant that could threaten development plans in the area,” says the consultancy.

“Without a viable offtake for ethane, the shale producers may be forced to curtail gas production,” warns Bentek.

Pic Source: Marcellus Center

Production at Marcellus is steadily growing with volumes rising from 0.3 bcf/day in early 2009 to 1.2 bcf/day in August 2010. Estimates for the future range from 5 bcf/day to 10 bcf/day over the next five years.

Marcellus does not have enough gas processing infrastructure yet to extract all the natural gas liquids (NGLs). And while is this being addressed by investments in new gas processing facilities a bigger problem is that there is no market for ethane from the NGLs in Northeast US.

Interest in establishing new pipelines is said to be growing with three proposals to build infrastructure to transport the ethane to Canada and even the Gulf Coast.

But the economics could be a challenge, points out Bentek. Ethane prices would have to be sufficiently higher than natural gas to cover the cost of transportation. Another risk is that of overbuilding ethane transportation – building more capacity than what the market can absorb.

And from the petrochemicals industry perspective, ethane prices would have to be low enough to give producers a competitive edge in global markets.