Report Highlights Benefits of Appalachian Ethane Storage
“There is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,” said DOE secretary Rick Perry at the recent annual meeting of the National Petroleum Council in Washington, D.C.
“As our report shows, there is significant global need, and enough regional resources, to help the U.S. gain a significant share of the global petrochemical market. The Trump administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic production diversity.”
DOE observes that the U.S. is now the top producer of oil and natural gas in the world, with an additional benefit in the form of increased natural gas liquids, including ethane. Some NGLs are burned for space heating and cooking while others are blended into vehicle fuel. Ethane is particularly useful as a feedstock for petrochemical manufacturing. Ethane production in the Appalachian basin is projected to continue its rapid growth through 2025 to a total of 640,000 bbld, more than 20 times greater than just five years ago.
The Appalachian region has experienced near- exponential growth in natural gas production, and that production is expected to increase for decades to come. The region is home to the Marcellus and Utica shale formations, and were it an independent country, Appalachia would be the third-largest natural gas producer in the world.
According to the Energy Information Administration, production in Ohio, Pennsylvania, and West Virginia has risen so rapidly that their combined share of total U.S. natural gas production has jumped from only 2% in 2008 to 27% in 2017. In addition, natural gas liquids processing and fractionating capacity in Appalachia has grown quickly to match this increase in natural gas production. However, the Appalachian region currently lacks other physical infrastructure for a hub to connect supply and demand sources, including storage for NGLs.
DOE’s report to Congress examines the potential for an Appalachian hub by comparing it to existing hubs that serve the Gulf Coast and Permian Basin, areas that account for most of the U.S. growth in NGLs outside Appalachia. In addition, market analysis from the report emphasizes that the development of an Appalachian hub may offer a competitive advantage for the U.S. to gain global petrochemical market share while not being in conflict with Gulf Coast expansion. The report explains that a new Appalachian hub would enhance the geo- graphic diversity of the vital U.S. petrochemical industrial sector, supporting the nation’s economic security.
(SOURCE: The Weekly Propane Newsletter, January 7, 2019)
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