PA & WV Ethane going West & East

Nova Chemicals updating neighbours on pipeline plan at Sarnia (Canada)

From a Press Release of Nova Chemicals, Sarnia Observer (Canada), January 15, 2015

Nova Chemicals is considering a four-kilometre pipeline project to connect its Corunna petrochemical facility to a secondary feedstock source. The pipeline is one of the proposed projects the company plans to provide updates on during a public information meeting set for January 22, 2015

The proposed Kimball pipeline project would replace a dormant four-inch pipeline with a four-km, 12-inch pipeline in an existing right of way, connecting the Corunna site to Plains Midstream’s Windsor-Sarnia pipeline near Kimball Sideroad and a secondary source of natural gas liquids feedstock originating in the Utica shale area of the U.S.

“This is all part of our continued revitalization of our eastern assets,” said Rob Thompson, Nova’s regional operations leader. Nova recently completed work to connect its Corunna facility by pipeline to natural gas liquids from the Eastern U.S. Marcellus shale region.

Also, Nova just recently converted its Corunna facility to use up to 100% feedstock from natural gas liquids. “Currently, we’re operating this facility 100% natural gas liquid feed” from the Marcellus shale pipeline connection, Thompson said.

The proposed pipeline project “will get us a secondary feed source,” he added. “It’s about reliability of the plant,” Thompson said. “It will give us opportunities, in case there’s issues with supply or pipeline reliability.”

Previously, the Corunna facility’s feedstock had been a combination of natural gas liquids and oil. “By switching to this newer feedstock, we’ve taken out the volatility of being tied to crude oil,” allowing the operation “to be much more stable than we would have been,” Thompson said.

He said construction on the Kimball pipeline replacement project could begin in the summer of 2016.  As well as replacing an existing smaller pipeline, the project would remove a dormant eight-inch pipeline from the right of way.

Last fall, Nova Chemicals said a new long-term agreement with the Kinder Morgan Energy Partners pipeline company would provide access to ethane and ethane-propane mixtures from the Utica shale region, through a 380-kilometre, 75,000 barrel-a-day pipeline to be built from Harrison County, Ohio to Michigan, where it can connect to Ontario.

The Jan. 22 meeting will also provide information on Nova’s other proposed capital projects. “Over the last 10 years, Nova’s invested basically $1 billion in capital in Sarnia-Lambton,” Thompson said. “We’re going to give the community an update on the status of each one of those projects.”

In late 2013, Nova Chemicals said it was considering spending another $300 million expanding ethylene manufacturing capacity by 20% at Corunna, as well as upgrading polyethylene capacity at its Moore site. Engineering work for those projects is underway but construction is still waiting for corporate approval, Thompson said. Nova has already applied for provincial environmental approval for the Corunna expansion, Thompson said.

The company is also still considering building a new polyethylene plant in Ontario, or on the U.S. Gulf coast. “We continue to study that facility to determine the best location, and potential timing for construction,” Thompson said. “It’s more positive today than it was a year ago,” he added.

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Qatar Petroleum and Shell not to pursue Al Karaana petrochemicals project

From an Article in OilVoice, January 14, 2015

Qatar Petroleum and Shell have decided not to proceed with the proposed Al Karaana petrochemicals project, and to stop further work on the project. The decision came after a careful and thorough evaluation of commercial quotations from EPC (engineering, procurement and construction) bidders, which showed high capital costs rendering it commercially unfeasible, particularly in the current economic climate prevailing in the energy industry.

The Al Karaana project was initiated with a Heads of Agreement (HOA) between QP and Shell in December 2011, and envisioned the construction of a new world-scale petrochemicals complex in the Ras Laffan Industrial City north of Qatar. The complex was to be operated as a stand-alone QP-Shell joint venture (80% QP, 20% Shell).

QP and Shell’s existing partnerships include Pearl GTL — the world’s largest integrated gas-to-liquids plant located at Ras Laffan, which has boosted Qatar’s position as the world’s GTL capital. The partnerships also include Qatargas 4 — an integrated Liquefied Natural Gas (LNG) asset — in addition to joint downstream and upstream investments in Singapore and Brazil.

See also:  www.FrackCheckWV.net

Marcellus ethane increasingly important in Canada

From an Article by Stephanie Novak, Pittsburgh Business Times, March 14, 2014

Ethane was initially viewed as a problem for Marcellus gas, making it too rich to pass through normal pipelines, said Pace Markowitz, director of communications at Nova chemicals, with offices in Pittsburgh.

Nova announced in December of last year it would begin converting Marcellus ethane into ethylene or polyethylene for petrochemical use. The company plans to complete the upgrades to facilities early next quarter, Markowitz said. When facilities are complete, pipeline capacity will accommodate 50,000 barrels of ethane per day, NOVA said. The plastics company said it would consume 37,000 barrels of the product at their Sarnia, Ontario petrochemical facility.

If production rates continue as expected, Marcellus production will exceed that of Canada this year, according to the U.S. Energy Information Administration’s monthly drilling productivity report. Range Resources supplies Nova with a significant portion of its ethane. When ethane is converted for petrochemical use, much of it comes back to the United States as polyethylene, which many manufacturing companies use in plastics products throughout the country. Roughly 60 percent of ethylene is converted to polyethylene, said Markowitz, of Nova.

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Low ethane prices have persisted in the U.S. (See graph above)

From the Article by Ingrid Pan, Market Realist, March 17, 2014

Ethane prices have experienced a steep decline over the past few years, due to a flush supply from active drilling in the U.S. Ethane prices (as priced at the natural gas liquids hub of Mont Belvieu) were mostly above $1.00 per gallon in early 2008, before the financial crisis later in the year. During the period of depressed commodity prices in late 2008 and 2009, ethane prices were ~$0.40 to ~$0.60 per gallon, in correlation with most other natural gas liquids and crude oil.

After that, the price of ethane per gallon traded mostly within the range of $0.60 to $1.00 per gallon through 2010 and 2011, as other NGLs and crude also traded up. However, from 2012 through now, ethane prices have remained very low, on both absolute and relative bases. Over the past two years, ethane prices have remained mostly below $0.40 per gallon. Plus, where ethane historically traded at prices of around 30% to 50% of WTI crude (per barrel), in 2012, it began to average at 10% to 20% of WTI crude.

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Middle East petchem industry switching from ethane to heavier feedstocks

From an Article of ICIS News, March 11, 2014

LONDON (ICIS)–The Middle East petrochemicals industry is increasingly shifting from using ethane as a primary feedstock to heavier slates, according to the CEO of Petrochemical Industries Co., a subsidiary of Kuwait Petroleum Corp.

Asaad Ahmad Alsaad said heavier slates including condensate, butane and propane were being looked at more and more as feedstocks to prepare for a potential ethane shortage in coming years.

Alsaad – whose remarks will be explored at the World Refining Association’s (WRA’s) Abu Dhabi International Downstream Conference in May – also observed that the Middle Eastern petrochemicals industry was moving to full integration with refineries that would bring bigger balance sheets and new technology allowing for more feedstock flexibility.

Caiman Energy will be able to process 520 million cubic feet of natural gas per day at its Fort Beeler facility by next summer, as the company invests $500 million in the Northern Panhandle of West Virginia, according to the Wheeling Intelligencer.  

The Fort Beeler cryogenic plant, near Cameron along U.S. 250 in Marshall County, now processes about 120 million cubic feet of gas per day, some from the near-by Whipkey pad of TransEnergy. By the end of this year, an additional 200 million cubic feet per day of processing capacity is expected. Then an additional 200 million more by next summer is planned, bringing the total capacity to 520 million cubic feet per day. Also, construction of Caiman’s pipeline network is ongoing, with much of the system set for completion by the end of this year.

Much of the Northern Panhandle Marcellus gas is of the “wet” variety containing ethane, propane and butane in addition to methane. Caiman’s 25-mile pipeline – designed to carry these natural gas liquids from the Fort Beeler site to its fractionation facility on the Ohio River – is also scheduled for completion this year.

The fractionation facility is currently under construction, just north of the Marshall-Wetzel county line on the Ohio River. This plant will separate the ethane, butane and propane from each other so they can be marketed. Once the pipelines and processing facilities are finished, Caiman’s total investment in Marshall and Wetzel counties will be more than $500 million.

Caiman and NOVA Chemicals signed an agreement on March 8th for the supply of 20,000 barrels per day of ethane on a long-term basis from the Fort Beeler Plant to feed the Corunna cracker plant, for the Sarnia, Ontario (Canada), petrochemical market. This arrangement is subject to NOVA Chemicals finalizing a pipeline transportation agreement to transport ethane from Fort Beeler into Ontario.