Report highlights need for ethane hub

PARKERSBURG — A federal report issued this week cites the economic potential from additional ethane hubs in the United States.

Natural gas processing capacity has expanded more than 10-fold from 2010 to 2016 in Kentucky, Ohio, Pennsylvania and West Virginia where the boom in crude oil and natural gas production from shale formations across the U.S. and in the Marcellus and Utica shales “has transformed global energy markets and may present opportunities for industry to establish additional hubs,” according to Ethane Storage and Distribution Hub in the United States, a report to Congress by the U.S. Department of Energy.

Natural gas plant liquids, especially ethane, are used in the production of plastics and other compounds.

“The large increase in (natural gas liquids) will come from the Marcellus and Utica plays production in the East and from the Permian basin in the Southwest over the next 10 years,” the report said.

“This growth is explained mainly by the close association between the production of (natural gas production liquids) and the development of natural gas and crude oil resources in those regions.”

The report, released on Tuesday, details the potential for a petrochemical hub located in the Appalachian region and emphasizes benefits for the economy in America that an ethane hub would have.

“This report affirms what we have been talking about for years,” U.S. Rep. David McKinley, R-W.Va., said. “Natural gas production in the region has grown by leaps and bounds over the past decade. The next logical step is to take full advantage of this resource and develop a petrochemical industry in the region.”

The report points out 95 percent of the country’s petrochemical industries are located on the Gulf Coast in Texas and Louisiana where production could be disrupted by hurricanes.

“This concentration of assets and operations may pose a strategic risk to the U.S. economy moving forward as extreme weather events impacting petrochemical and plastics production on the Gulf Coast can limit the availability of feedstocks to manufacturers across the United States,” the report said.

Refineries and other petrochemical facilities shut down in August 2017 because of the fear of flooding from Hurricane Harvey, causing 54 percent of U.S. ethylene production and 36 percent of ethylene consumption capacity to go offline, the report said.

Disruptions from Hurricane Katrina in 2005 caused price spikes of 20 to 30 percent in the resins used to make plastics.

“It is in the national interest to diversify and build a secondary hub in West Virginia, Ohio, Pennsylvania, and Kentucky,” he said.

The Bens Run area near Tyler and Pleasants counties is among three cited with potential to become an underground storage hub, called the Appalachian Storage Hub, in West Virginia. Also, Odebrecht/Braskem chose the former SABIC plant site in Washington Bottom in Wood County for a proposed multi-billion-dollar ethane cracker plant, albeit the future of the ethane cracker project is unclear.

“West Virginia and surrounding states are poised to become a leader in petrochemicals and manufacturing, but we need to build the necessary infrastructure to make it work,” McKinley said.