HOUSTON, Pa. - Philadelphia's reindustrialization starts
300 miles away at a sprawling processing plant in Southwestern Pennsylvania
where liquid fuels extracted from Marcellus Shale gas begin a cross-state
journey to the Delaware River.
In the last five years, a forest of metal distillation
towers has sprung up like a poplar grove from the Washington County
countryside, surrounded by rows of cylindrical storage tanks. The complex,
owned by MarkWest Energy Partners of Denver, separates high-value liquid fuels
such as propane and butane from the "wet" natural gas produced near
here, the sweetest spot in the prolific Marcellus Shale formation.
Those natural gas liquids will be pumped through a
repurposed pipeline to Marcus Hook, where Sunoco Logistics Partners L.L.P. is
demolishing the retired Sunoco petroleum refinery and replacing it with new
equipment to handle Marcellus liquids. Most of the propane, butane, and ethane
will be shipped to European petrochemical plants that are retooling in
expectation of decades of plentiful Appalachian supply.
Industrial and political leaders in the Philadelphia
region hope this initial movement of fuel to Marcus Hook - propane already is
being brought in by rail and truck - is only the first trickle in a flood of
Marcellus Shale products that will be routed through Southeastern Pennsylvania.
Energy-hub promoters envision an industrial revival in a
region where manufacturing has been on the ropes for decades. They forecast a
proliferation of new businesses built on vacant riverfront brownfields,
employing high-paid workers to produce petrochemicals, plastics, fertilizer,
methanol, and motor fuels - all from natural gas.
"We can turn Philadelphia into the Silicon Valley of
energy," said Michael L. Krancer, a Blank Rome law partner and former
Pennsylvania environmental protection secretary who is one of the chief
cheerleaders of the energy-hub concept. His firm also represents Sunoco
Logistics.
Not everyone is on board. Fierce dissent has arisen along
the route of the pipeline, called Mariner East, particularly in West Goshen
Township, Chester County, where opponents say they have nothing to gain from
the new export-energy trade.
Environmental leaders say the zeal to embrace a
fossil-fuel economy has crowded out alternative, green visions.
"Is this the type of city Philadelphia wants to
be?" asked Joseph Otis Minott, executive director of the Clean Air
Council. "What are the environmental implications of this? Is this
sustainable long-term? None of that debate seems to be taking place."
In Washington County, south of Pittsburgh, where Range
Resources Corp. drilled the first Marcellus exploratory well 10 years ago this
month, the projected production is staggering. Range is on course to triple its
current daily production of 1 billion cubic feet of gas by the end of this
decade.
"We've got a five-year plan, a 10-year plan, and a
long-range plan," said John K. Applegath, who heads Range's Southern
Marcellus operations. "There's decades of drilling."
By the end of this year, Marcellus production in
Pennsylvania and surrounding states is expected to account for a quarter of the
nation's total gas supply.
"If the Marcellus were a country, it would rank as a
top-10 producer in the world," Frank M. Semple, chairman of MarkWest
Energy, told a shale industry conference in Pittsburgh last month.
MarkWest, which has five processing facilities in the
Marcellus, is one of several "midstream" companies that gather
natural gas from producers and purify it before sending the gas into major
pipelines for delivery to customers.
"This region is so prolific in terms of production,
the infrastructure is just catching up," Randy J. Cleveland, chief
executive of XTO Energy Inc., said in a recent interview. XTO, an ExxonMobil
subsidiary, recently opened a natural gas liquids plant north of Pittsburgh.
Natural gas contains mostly methane, but the wet
Marcellus gas in Southwestern Pennsylvania has elevated levels of high-energy
compounds such as propane, ethane, and butane - called natural gas liquids
(NGLs) because the materials condense easily at low temperatures.
NGLs are a challenge because they burn hotter than
methane. Producers like Range realized early on they would produce so much wet
gas they needed to strip out some NGLs to keep the gas within specifications to
burn in power plants and home furnaces. Otherwise, they would be forced to
curtail drilling.
"This gas is so deliciously rich, we realized about
seven years ago we were going to have a problem," said Matthew Curry,
Range's director of business development. "It's also an economic
opportunity."
Propane, butane, and ethane are more valuable than
natural gas, if buyers can be found. MarkWest and others were enlisted to build
cryogenic plants in places like Houston that chill the natural gas to separate
the NGLs. Each gas turns into liquid at a different temperature.
An eager market was found in the petrochemical industry,
which can use the cheaper NGLs to replace more expensive raw materials derived
from petroleum.
That's where Sunoco Logistics stepped in. It saw an
opportunity to convert an underused refined-fuel pipeline crossing Pennsylvania
and Ohio to transport the NGLs.
The project Sunoco calls Mariner West went on line late
last year, delivering ethane from Pennsylvania across northern Ohio to a
petrochemical plant in Sarnia, Ontario.
The Mariner East project, which connects the Houston,
Pa., plant to Marcus Hook, is scheduled to begin shipping propane this winter,
and ethane next year. Most of the fuel will be shipped to Europe.
Local opposition has slowed the construction of some
pumping stations on the pipeline - Sunoco is seeking a ruling from the
Pennsylvania Public Utility Commission to bypass local zoning rules. When it is
completed, Mariner East will transport 72,000 barrels of NGLs a day.
That's only the beginning. Production of Appalachian NGLs
is expected to grow tenfold in a decade, to a million barrels a day. A pipeline
to transport the stuff to the Gulf Coast is in the works. So-called ethane
crackers are planned for Beaver County and West Virginia that could take some
NGL production.
Sunoco Logistics also is planning a second Mariner East
pipeline to Marcus Hook. It would carry four times as much natural gas liquid
as the first pipeline.
Source: Philly.com
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