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An Appalachian petchems hub: Potential or pipe dream? (UPDATED)

HOUSTON, July 24, 2017 (PCW) -- After Shell made its momentous decision last year to build a 3.3 billion lbs/yr cracker and derivatives in neighboring Pennsylvania, other petrochemical projects have appeared slow to develop. Thai state-owned PTT delayed its FID to year’s end from February (the second time it has done so) and private company Mountaineer NGL Storage seeking to develop NGL caverns in the region has been slowed down by regional permitting processes, which is now putting its possible facility in service in mid- to late 2018, instead of the initially announced end 2017 time frame.

Recently, PTT acquired portion of the acreage it would require to build its proposed cracker and associated units in Ohio, revitalizing Appalachian dreams of becoming a petchems hub. However, the gap between what is currently being developed and what the community hopes ultimately will come to pass, is vast. And future developments could prove challenging given the intricate supply-demand balance that exists in Appalachia. In order to better understand future development needs, it is crucial to examine what currently exists in the region.


Fractionation/processing facilities

Collectively has 190,000 b/d of de-ethanizer capacity, some 560,000 b/d of fractionation capacity with another 200,000 b/d being construction in Appalachia.

580,000 b/d fractionation capacity at the Hastings plant in West Virginia

40,000 b/d of de-ethanizer capacity and 43,000 b/d of propane-plus fractionation capacity.


The 50,000 b/d Mariner West pipeline moves ethane products from Appalachia to Marysville, Michigan and the Canadian border. Nova Chemicals is an anchor shipper. Owned by Energy Transfer.

The 70,000 b/d Mariner East I pipeline transports ethane and propane from Appalachia to the Marcus Hook Industrial Complex on the Delaware River, where they are processed, stored and distributed to local, domestic and waterborne markets. Range Resources and Consol Energy are anchor shippers on ME1. Mariner East 2 will expand the system’s capacity to 275,000 b/d and also allow for the movement of butane and heavier liquids. It is expected to go into service in 3Q-4Q. Antero is an anchor shipper. A further expansion, Mariner East 2X, which would continue to expand capacity, is being mulled. Owned by ETP.

The ATEX ethane pipeline runs from Greensburg, Pennsylvania, to Mont Belvieu. Its capacity is 125,000 b/d and can be expanded to 250,000 b/d. Owned by Enterprise Products Partners. Range and Chesapeake Energy are anchor shippers.

An 180,000 b/d condensate and natural gasoline pipeline taking Appalachian supplies to owner Marathon’s Canton, Ohio, refinery.

A 30-mile pipeline from Sherwood, West Virginia, to Houston, Pennsylvania. Owned by MPLX (Marathon Petroleum limited partner).

A 50-mile system from Williams’ Oak Grove processing plant to Houston, Pennsylvania. Owned by Williams.

A 215-mile, 12-inch diameter ethane and E/P mix pipeline from Harrison County, Ohio, to Kinder Morgan’s existing pipeline and facilities in Fulton County, Ohio. The product would then move to Ontario, Canada. It has an initial capacity of 50,000 b/d and can be expanded to 75,000 b/d. Owned by Kinder Morgan and Riverstone Investment Group. The project has been dogged by eminent domain lawsuits and changes to the route. Nova is the anchor shipper. It has an expected in-service of January 2018.

A 107,000 b/d pipeline from Houston, Cadiz and Scio in Ohio to the cracker in Monaca. Construction is expected to begin in late 2018 with start-up in early 2020.


Capacity of approximately 285,000 Bbls at its Siloam, Kentucky, processing complex. Some 190,000 barrels of storage at Houston, Pennsylvania; 270,000 barrels at Hopedale; 40,000 barrels at Keystone processing facilities.

Some 97,000 barrels of propane, butane, natural gasoline and Y-grade storage in West Virginia and Pennsylvania.

A 3.25 million barrel NGL storage facility near Clarington, Ohio. Construction is expected to begin at year’s end after securing the necessary permits and signing up customers, and is expected to be complete in the middle of next year. The four-cavern facility is expected to have a loading capacity of 10,000 b/d for truck and rail.

Export facilities

Has NGL terminalling and 3 million barrels of storage facilities. Is the termination point of the Mariner East pipelines, Has four docks for exporting LPGs, two of those can load ethane-capable vessels.

Petchems facilities

A 3.3 billion lbs/yr ethane cracker with 3.5 billion lbs/yr PE capacity located in Monaca, Pennsylvania, to come online in early 2021.

A 2.2 billion lbs/yr ethylene plant with 1.1 billion lbs/yr of MEG, 220 million lbs/yr of ethylene oxide and 1.54 billion lbs/yr of HDPE capacity. FID expected at year’s end.

Given the forecasts of vast potential reserves locked underneath Appalachian soil, the possible benefits to local economies runs understandably high.

A recent study by the American Chemistry Council posited the production boom could bring in $29 billion in new regional revenue. This study, however, assumed that five world-scale (13.75 billion lbs.yr) new crackers, 8.25 billion lbs/yr of new polyethylene capacity, two propane dehydrogenation units, 75-100 million barrels of storage and 500 miles of NGL pipelines between Monaca, Pennsylvania, and Cattletsburg, Kentucky, would be built.

To date, one 3.3 billion lbs/yr cracker is being built with a 2.2 billion lbs/yr unit (PTTGC) still being mulled. Shell’s PE capacity stands at 3.5 billion lbs/yr and PTTGC is looking at another 1.54 billion lbs/yr (the total coming in at nearly 39% of expectations).

Then Sunoco Logistics, now Energy Transfer, has said it was considering a PDH unit at Marcus Hook, but firm plans have yet to be announced. NGL storage currently stands at 882,000 barrels (about 1.2% of expectations), although if Mountaineer’s 3.25 million barrel facility does come to fruition, total storage capacity would bring it closer to 6% of the ACC study’s assumptions.

The gap between assumptions and reality is vast, but regional governments are banding together to close the chasm. US senators Joe Manchin and Shelley Moore Capito of West Virginia have sponsored a bipartisan bill that would make a regional NGL storage facility eligible for a Department of Energy loan program, incentivizing private sector investment. The senators are now trying to tack the standalone bill onto the larger energy bill; timing on when that might take place is unclear.

The bill underscores what stakeholders in the region believe to be the area’s most crucial infrastructure gap: storage. The race to close that gap ultimately comes down to the proverbial chicken-and-egg question, regional sources said. Without private investment, storage would be hard pressed to get built. Without storage, potential investors, be they petchems or manufacturing companies, are loathe to take on the risky mantle of "first mover." -- Samantha Hartke

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