Ethane storage hub feasibility confirmed by geologic study

August 29, 2017
Paul Boulier, vice president of industry and innovation for Team Neo, talks with attendees at a workshop for the Appalachian Storage Hub for Natural Gas Liquids held Tuesday at Hilton Garden Inn in Southpointe. - Michael Bradwell/Observer-Reporter Order a Print

A research team from West Virginia University said Tuesday a yearlong study of geologic sites in 50 counties in the region has determined there are multiple sites that would support a proposed Appalachian Storage Hub for ethane.

While details of the study are highly technical, the results show the Appalachian Basin, which now produces one-third of the nation’s natural gas and is abundant in ethane, could support the project, which is seen as a way to build out a petrochemical industry that has been long present in the region.

“Appalachia is poised for a renaissance of the petrochemical industry due to the availability of natural gas liquids,” said Brian Anderson, director of the WVU Energy Institute.

“A critical path for this rebirth is through the development of infrastructure to support the industry. The Appalachian Storage Hub study is a first step for realizing that necessary infrastructure.”

The results were discussed before more than 100 geologists, chemical engineers, oil and gas business representatives and others in academia during an all-day workshop session at Hilton Garden Inn in Southpointe.

As part of the study led by Doug Patchen, director of WVU’s Appalachian Oil and Natural Gas Consortium and the Eastern Petroleum Technology Transfer Council, researchers from the geological surveys in West Virginia, Pennsylvania and Ohio studied geologic formations that could offer suitable locations for developers to build underground facilities to store natural gas liquids from Marcellus and Utica wells.

The concept of a storage hub was introduced in June during a similar gathering at Southpointe. Patchen’s study was supported by a $100,000 grant from the Benedum Foundation and matched by contributions from numerous oil and gas companies in the region.

Tri-state effort

The latest work discussed Tuesday was conducted as part of the efforts of the Tri-State Shale Coalition, a cross-border collaboration in Ohio, Pennsylvania and West Virginia whose members say it is a critical key for unlocking the region’s economic opportunity.

The coalition was created following a collaborative agreement signed in October 2015 by governors’ offices in the tri-state. Charter members include the Benedum Foundation and Team NEO, a wing of the Jobs Ohio group; the Allegheny Conference on Community Development; and Vision Shared, all nonprofit economic development organizations in the three states.

As a public-private partnership, the coalition brings together workforce development organizations, academic institutions such as WVU and economic development groups to advance the area as a “super region” for petrochemical, plastics fabrication and advanced manufacturing jobs and investments.

Under Patchen’s direction, the team of geologic researchers identified and mapped all potential options for subsurface storage of natural gas liquids along the Ohio River from Southwestern Pennsylvania to eastern Kentucky and the Kanawha River in West Virginia. The researchers focused on three options for storage:

• Areas where Salina salt bed formations are a least 100 feet thick and are suitable for a type of mining that uses a liquid such as water injected through a borehole to dissolve and extract salts and minerals.

• The Greenbrier Limestone in areas that are 1,800 to 2,000 feet below the surface and at least 40 feet thick.

• The group also looked at opportunities in converting existing sandstone reservoirs in depleted gas fields and inactive gas storage fields to natural gas liquids storage.

During his remarks, Patchen said the study, which will be released to the public Friday, confirmed there are multiple storage options that can be exploited.

Some industry estimates have placed the price of a storage hub at about $10 billion.

Patchen said it is possible that the hub concept may require more than one storage facility, but would depend upon which types of NGLs are being stored. The study is being made available to the natural gas industry to determine the feasibility of investment in such a project.

Major potential

During a 90-minute panel discussion, four people representing a cross-section of researchers, economic development and business executives said the concept has the potential to generate $36 billion in industrial investment in petrochemical and plastic processing facilities and create more than 100,000 jobs in the region.

Panelist Paul Boulier, vice president of industry and innovation for Ohio’s Team NEO, noted that the strategy of moving forward as a region to promote the hub gives it enormous economic clout.

He said the tri-state region represents $1.4 trillion in gross domestic product, which if viewed as a country would make it the 20th largest in the world.

And the ethane, which is the building block for all things plastic, wouldn’t be fueling a start-up industry in the region, Boulier added.

He said within a 250-mile radius that comprises the tri-state region, there are more than 17,000 petrochemical and plastics companies, including 250 that each employ more than 100 people.

Anderson said the hub is needed to bring more manufacturing to expand economic development within the Appalachian Basin.

“We’re at a tipping point in this region,” Anderson said, noting that most of the natural gas products coming out of the Marcellus and Utica shales are being exported to markets in Canada, the Midwest, the East Coast and the Gulf Coast.

“Having natural gas liquids storage capacity in the greater region is critical to fully realizing the potential of the shale gas resources found in our three states, said David Ruppersberger, president of the Pittsburgh Regional Alliance, the economic development marketing affiliate of the Allegheny Conference. “Shell’s decision to build a world-scale petrochemical facility here is game-changing and shines a spotlight on fresh opportunities in this part of the country.

“Natural gas storage will do the same, positioning us to attract additional ethane crackers and other petrochemical investments, as well as supporting further upstream and midstream development.”

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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