The Register-Herald, Beckley, West Virginia

Today's Front Page

April 30, 2011

Natural gas spinoff products growing

By Taylor Kuykendall Register-Herald Reporter

The spinoff products of natural gas are increasingly becoming a larger sector of the oil and gas market.

Ethane, a valuable byproduct of the chemical industry, has been so abundant in West Virginia, without a place to use it, the industry may be forced to slow down development. West Virginia is already a net exporter of propane.

Nationwide, the production of natural gas liquids (NGLs) topped 2 million barrels per day, the Energy Information Administration found.

The market for NGLs, and its abundance, which includes ethane, propane, butane and isobutane, has not escaped the attention of West Virginia leadership. A task force created by acting Gov. Earl Ray Tomblin to attract spinoff natural gas industries will hold its first meeting next week.

The NGLs extracted from gas plants, many officials are saying, will provide the catalyst for regenerating the state’s chemical industry. Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said the spinoff industries would be a big boost for the West Virginia economy.

“It’s probably the reinvention of the chemical industry here,” DeMarco said. “The reinvention of the plastics industry here, and it’s jobs, jobs, jobs. These are good-paying jobs. They are probably in the neighborhood of $60,000-a-year jobs, working for these chemical industries.”

Ethane, which accounts for about 40 percent of the volume of NGLs extracted from natural gas plants, is used as a petrochemical building block. Ethane can be used to produced ethylene, which is commonly used in plastic manufacturing.

“It appears that, because of the natural gas hydrocarbons, and especially ethane, we are being looked at very intensely as a location to site an ethane cracker or two,” DeMarco said. “ ... We’ve had four companies very, very interested, two international companies, who are looking very intensely at the West Virginia locations.

“The reason the Kanawha Valley is attractive and the reason that the Ohio Valley is attractive is because we had facilities at these places. We have the infrastructure already in place, though it may need to be upgraded or increased.”

Natural gas sources that produce a high level of NGLs are often considered valuable to companies who can sell the NGLs to boost profits, even if natural gas prices are lower than normal.

DeMarco said the gas industry has actively been seeking a source to sell ethane that is currently blended back into the natural gas pipeline.

“We’ve got so much of it right now, if we don’t find an outlet for ethane, then, at some point in time, the Marcellus and Utica developments and other developments will have to be curtailed simply because we don’t have an outlet for this,” DeMarco said.

Currently, DeMarco said, natural gas operations are blending about 60,000 barrels of ethane per day. Ethane, and other hydrocarbons, increase the BTU level of natural gas and thus must be controlled by stripping the hydrocarbons from particularly “wet” sources of natural gas.

DeMarco added that between 40 and 50 derivative products could be made from one ethane cracker, creating several plants and several local jobs.

“Some of the companies in here are looking to be here 20 or 30 years, especially those with large acreages,” DeMarco said. “They are going to be here, and ethane will be here for that time and going forward.”

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