Natural Gas NOW
Fracking is going to make Pennsylvania shine again as a center of manufacturing and progress, due to the enormous potential of the Marcellus and Utica shale.
There is an amazing new study out — produced for Pennsylvania Governor Tom Wolf, no less — that uses hard data to illustrate what a bountiful future the Commonwealth has before it due to fracking. Titled Prospects to Enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing and filled with wonderful maps and charts, it is an independent report by IHS Markit. Team Pennsylvania Foundation (Team PA) commissioned the report “to identify and evaluate the opportunities for petrochemical and plastics manufacturing in Pennsylvania based on natural gas resources available in the Marcellus and Utica Shale plays.”
I didn’t think Tom Wolf had it in him, but the report is simply outstanding. It makes the case for infrastructure development like no one else has. Jim Willis was, as usual, the first to open the book and his take is available here at MDN. The report also has a nice Executive Summary but it’s probably a little lengthy for our busy readers, so I have distilled the basic facts down to bullet points for those eager to get to the good news faster and there’s plenty of it.
- The Marcellus Shale resource alone represents the second largest natural gas field in the world and underlays two-thirds of Pennsylvania, extending into the neighboring states of New York, Ohio, and West Virginia.
- In 2015, the natural gas from the Marcellus and Utica Shale plays accounted for a quarter of all natural gas produced in the United States and is expected to account for more than 40% of the nation’s natural gas production by 2030.
- A critical component of the natural gas produced in the region includes the abundant availability of ethane and propane—two important and high-value natural gas liquids (NGL) used in basic petrochemical production and plastics manufacturing.
- A significant factor that continues to drive natural gas development in Pennsylvania is the fact up to 40% of natural gas produced in the Marcellus and Utica Shale plays is rich in NGL, more than 70% of which is ethane and propane.
- Between 2026 and 2030, NGL production to meet US demand is expected to reach nearly 6.3 million barrels per day (b/d), of which more than 1 million b/d of NGL is expected to be produced in the Marcellus and Utica Shale plays. The high-value of the NGL contained in the natural gas stream—specifically ethane and propane— is responsible for driving ongoing production increases.
- As of the end of 2016, 100% of the ethane produced in Pennsylvania and recovered as a petrochemical feedstock is being shipped out of the state to other end use markets for petrochemical processing. This is largely because of the low cost of ethane produced in the Marcellus and Utica Shale plays compared to ethane produced from the US Gulf Coast (USGC) and other global locations.
- Between 2026 and 2030, the expected ethane production from the Marcellus and Utica Shale plays will be enough to support up to four additional world-scale ethane steam crackers in the region, even after meeting the demand from the future Shell Pennsylvania Chemicals ethane steam cracker in Southwestern Pennsylvania. This is also in addition to meeting the demand for ethane from pipelines currently shipping it out of the region and future pipeline projects that will do the same.
- As with ethane, propane production is expected to increase in the Marcellus and Utica Shale plays through at least 2030 and is expected to be priced lower than propane from the USGC. While IHS Markit predicts ethane will primarily be used as a petrochemical feedstock with opportunities for additional steam crackers locating in the footprint of the Marcellus and Utica Shale plays, propane has multiple competing end uses that may result in NGL being used for other purposes. Propane can be used as a heating fuel source or as a petrochemical feedstock to produce propylene— through a process known as propane dehydrogenation (PDH)—or by steam cracking a mixture of ethane and propane. Propylene can be converted into polypropylene, a versatile and high-growth plastic resin.
- From NGL to plastics, IHS Markit estimates 73% of United States and Canada’s polyethylene demand and 67% of polypropylene demand falls within a 700-mile region of Southwestern Pennsylvania. These percentages are well above relative capacities to meet the demand within the target region, meaning that producers within this region will enjoy a location advantage over suppliers outside the region.
- New regional petrochemical producers will be well positioned to compete for a respectable share of this domestic demand because of a shorter supply chain.
- Additionally, petrochemical producers operating in the region will also be in a strong position to take advantage of export opportunities as well.
- The first large scale NGL-based petrochemical investment in Pennsylvania will be the Shell Pennsylvania Chemicals ethane cracker in Southwestern Pennsylvania. It is slated to be a world-scale, ethane-fed steam cracker that will produce 1.5 million metric tons per year of ethylene, which will be converted to more than 1 million metric tons per year of high-density polyethylene and 550,000 metric tons per year of linear low-density polyethylene.
These facts offer a compelling story with respect to the huge contributions made by fracking to the economic future of Pennsylvania, which is exceedingly bright on the manufacturing side. IHS Markit also makes a equally compelling recommendation regarding the need for pipeline and other infrastructure across the Commonwealth.
This infrastructure will, of course, will be fought every step of the way by PennFuture, the Clean Air Council, the Delaware Povertykeeper (a/k/a Riverkeeper), StateImpactPA and other shills financed by the Heinz Endowments and William Penn Foundation; the twin pillars of opposition to Pennsylvania progress:
Pennsylvania is currently only using a limited portion of the available Marcellus and Utica Shale natural gas and NGL in-state. As such, it must begin taking immediate steps to support a long-term strategy that will maximize in-state economic development—as other US states and regions are also competing for the resources. To maximize the potential economic development benefits of increasing NGL production volumes and related investment, including both attracting additional petrochemical companies and expanding the plastics manufacturing sector, IHS Markit recommends that Pennsylvania take aggressive action to address potential developmental and infrastructure constraints proactively. This includes investing in suitable sites to accelerate pad-ready development and supporting NGL pipeline infrastructure and storage capacity. These actions are critical to ensuring that Pennsylvania is positioned to develop long-term, job creating manufacturing opportunities.
It couldn’t be any more clear; fracking is creating economic opportunity across Pennsylvania and we need more pipelines and other infrastructure to realize those possibilities. It doesn’t require public funding; it only demands moving the obstructionists out-of-the-way.