W.Va. businesses ready to store, use ethane
WELLSBURG — One West Virginia manufacturer is looking forward to having an ethane storage facility, or hub, that can serve industries in the Northern Panhandle. One Denver entrepreneur says he is getting ready to build one.
“The hub buildout will create positive momentum for additional investment and development of chemical and manufacturing, such as ethane crackers and plastics processors like Eagle, effectively lowering the risk for additional investments,” said Joe Eddy, president and CEO of Eagle Manufacturing Co. in Wellsburg.
Eagle Manufacturing produces industrial safety and hazardous-materials handling products.
Its customers are contractors, manufacturers, fabricators, utilities, the military, government agencies and companies in the printing, chemical, transportation, textile, automotive, agricultural, medical, oil and gas and electrical industries.
“The sooner this buildout starts, the sooner this momentum will build,” Eddy said. “Much like the complementary Mont Belvieu Storage Hub along the Gulf Coast, the (Appalachian storage hub) will provide growth and expansion over the next 50 to 70 years.”
Ethane is one of several liquids that are found in natural gas wells drilled in the Marcellus and Utica shales.
Natural gas liquids, which are separated from gas after it comes out of wells, have value in manufacturing processes. The problem in Appalachia is storing natural gas liquids in the region instead of sending them elsewhere for use.
Shell Chemical is building a cracker in Pennsylvania that will use ethane in its processes. And PTT Global is nearing a decision on whether to build a cracker across the Ohio River from Moundsville.
West Virginia University has identified and mapped areas of opportunity for an ethane storage hub, including along the Ohio River from southwestern Pennsylvania to eastern Kentucky and the Kanawha Valley.
The study said the region has geology that would allow underground storage of large volumes of natural gas liquids, or NGLs.
David Hooker, CEO of Energy Storage Ventures of Denver, says he’s ready to build an underground NGL storage facility at Clarington, Ohio, near Moundsville.
As planned now, Mountaineer NGL Storage would receive ethane, propane and butane from the Blue Racer Midstream processing plant at Natrium in Marshall County. Should PTT Global build its cracker, Mountaineer would send ethane by pipeline to that plant.
Hooker said the storage facility is a $150 million investment that would serve petrochemical companies in a wide region. It will be able to store 3.25 million barrels of liquids with the potential to add 500,000 barrels per month one it is operational. Although the initial storage would be in Ohio, the facility could expand into West Virginia.
NGLs would be stored in a salt formation about 6,700 feet under the surface, Hooker said.
“That’s very deep, but still workable,” he said.
“I would call us a warehouse. We’re not anticipating taking ownership of the ethane itself,” he said.
So far, Mountaineer NGL has drilled a test well and completed three market evaluations, and it has applied for the permits it needs for construction and operation. Hooker said he had hoped to receive the permits before the end of this year, but now it looks like that will happen in the first or second quarters of next year.
Time is not critical for the permit process because the two largest potential customers are not ready to receive NGLs, Hooker said. Shell’s cracker is not expected to be in operation until 2021 or 2020, and PTT Global has not announced its decision yet, he said.
“But I think everybody’s pretty positive on the PTT Global plant,” he said.
Eddy said he looks forward to a regional ethane storage hub providing essential raw materials to an expanding chemical manufacturing industry along its pipeline system.
“Specific to Eagle Manufacturing, it will provide the security and stability of an abundant, affordable supply of plastic resin, or what I like to call ‘white gold,’ to fuel our plastics processing business,” Eddy said.
Eagle Manufacturing does not use ethane. A cracker plant uses ethane to produce ethylene, which is then fed into a reactor in combination with a catalyst to make polyethylene. Eagle Manufacturing molds polyethylene pellets into more than 500 finished plastic products, Eddy said.
“We currently source our plastic resin from the Houston, Texas, area, which is delivered by rail car to our Wellsburg, West Virginia, plastics plant. We currently process about 24 million pounds per year, with rail delivery costs of 7-8 cents per pound, requiring 14-30 days delivery from Texas. The hub will provide competitively priced resin at a much-reduced delivery time and cost, reducing inventory quantity requirements, freeing working capital for expansion of operations and employment base,” Eddy said.
“The key point is that the hub will offer the opportunity for sustained competitive advantage for Eagle and all other businesses connected there,” Eddy said.
This article was authored by Jim Ross for The State Journal. Click here to read it on the publication's website.