Howard Swint: WV natural gasoline fueling economic development (Daily Mail)
Natural gasoline is one of West Virginia’s most abundant yet least recognized natural resources. But chances are virtually anyone who has driven our highways lately has benefited economically as well as environmentally from its use.
Natural gasoline is the liquid byproduct of natural gas that, for traditional shallow wells, has been collected as condensate in wellhead holding tanks for over a century. Commonly referred to as “drip gas” in the field, its use dates to early American industrialization when Henry Ford used it in the Model T and the Wright Brothers tapped Ohio wells to power their aircraft engines.
Farm tractor manufacturers later pioneered improvements in air manifolds on their internal combustion engines that resulted in more efficient use of the fuel. These and other carburetion advancements subsequently led to widespread acceptance of the low-octane fuel across motorized industries.
During the Great Depression, natural gasoline was commonly used in rural areas as a substitute for refined commercial-grade fuel, and it was still available at service stations as late as the 1950s.
Today, natural gasoline is a valuable petrochemical commodity traded on international exchanges. And it is being produced in record amounts in the Marcellus and Utica shale natural gas fields due to advancements in deep well, horizontal drilling resulting in quantities far too great to store on-site.
Consequently, in regions where there is insufficient pipeline capacity, natural gasoline and other natural gas liquids (NGLs) such as ethane, propane and butane are effectively shut-in at the site. This results in NGL rejection, whereby these liquids are left in the methane stream only to be burned for their BTU value or simply flared-off resulting in millions of tons of useless greenhouse gas emissions.
In regions where NGLs are transported to market, they realize their highest and best use with the lighter hydrocarbons serving as starter feedstock for a wide variety of intermediate chemical compounds, including the plastics value chain.
While natural gasoline can also be used in manufacturing, its greatest value at current prices is as a blendstock in reformulated gasoline, as it allows refiners to generate more product from each barrel of crude oil. This in turn reduces foreign imports along with their attendant environmental and production diseconomies.
It also results in greater economic development in the heartland, with the rebirth and success of the Wheeling and Lake Erie Railroad as one of the finest examples. Founded in 1871, the W&LE has endured broad economic cycles, sweeping mergers, dissolution and then reincorporation through acquisitions to become one of the largest regional railroads in the United States.
Today, its mainline runs through the heart of the Marcellus and Utica shale formations where it has transported hundreds of millions of dollars worth of NGLs to market, including natural gasoline to the Marathon Petroleum Refinery in Canton, Ohio, where it accounts for fully one-quarter of total capacity.
Marathon has also invested heavily in the Utica Shale fields directly, with over $1 billion of investment in new pipeline infrastructure and midstream fractionation facilities that separate constituent gases for industrial use.
The Catlettsburg, Kentucky, refinery has also completed $170 million in improvements for processing natural gasoline from the Tri-State area, primarily for condensate processing equipment, storage tanks and upgraded river docks.
Catlettsburg refines and distributes virtually all of the retail gasoline sold in southern West Virginia through an extensive, vertically integrated barge and tank farm storage system along the Ohio and Kanawha rivers, including the terminal in Charleston. Their highly efficient transportation network contributes significantly toward making the Port of Huntington Tri-State the largest inland port in the United States.
Fundamentally, the near-source economics associated with producing and using local-sourced natural gasoline provide strong competitive advantages as well as environmental benefits in the form of reduced greenhouse gas emissions. And it is yet another well-to-wheel economic development opportunity that West Virginia can leverage in meeting our national transportation and energy sector needs.
Howard Swint is a commercial property broker.
This op-ed was authored by Howard Swint for the Charleston Gazette Mail's Daily Mail Opinion page. Click here to read it on the publication's website.