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Ethane Storage Hub – Working Together to Secure More Growth for Our Region

  September/October 2018 / Vol 8 Issue 5

Ethane Storage Hub – Working Together to Secure More Growth for Our Region
By: Teresa Irvin McCurdy, President of TD Connections, Inc.

There are a lot of people diligently working behind the scenes to advance the ethane storage hub, site a second cracker plant, and expand the plastic manufacturing industry. PA State Representative Eric Nelson of Westmoreland County has taken the lead, with support from his regional State Senators and Representatives, in spearheading a group called the Labor and Energy Alliance which is comprised of labor unions, state government, natural gas operators, midstream companies and a few related associations. Rep. Nelson said, “the group was formed to bring government, industry and labor together to advance a common goal to greatly expanding the plastic manufacturing industry in Southwest PA.”

On March 21, 2018, Governors Tom Wolf of Pennsylvania, Jim Justice of West Virginia, and John Kasich of Ohio announced the extension of the Tri-State Shale Coalition, a three-state agreement to collaborate on efforts to maximize the use of the shared natural gas resources in the Appalachian Basin. Formed in 2015, the Coalition has been active in trying to advance the use of ethane in a cracker plant as well as downstream manufacturing and vendor related businesses. It was noted during the meeting that there is enough ethane being burned by natural gas electric generation plants to support a second cracker plant, if the area had enough ethane storage.

One of the crucial hurdles is siting the underground storage location. The first formation the group focused on was salt. The problem with storing ethane in a salt formation is that as the salt formation is being developed to hold more ethane, it would continuously produce massive volumes of brine water that would need to be treated or disposed. I was invited to join the meeting to see if I might be able to present any solutions due to representing a natural gas wastewater treatment facility, Hydro Recovery, since 2011 who recently developed their own evaporator with the ability of making salt. It was also due to my leadership role as the Subcommittee Chair of Water and Waste Management for PIOGA’s Environment Committee and my past role in the MSC’s Water subcommittee.

Although it would not be impossible to remove the salt and create pure water, the real issue is the sheer volumes of brine that would be produced daily. When asked how much brine would be generated daily, the lead researcher from West Virginia University stated, “an amount equal to one day’s worth of all the flowback and produced water generated in Pennsylvania.” The PA waste report for June 2018 showed ~5,544,072 bbls of wastewater was produced or 184,802 bbls per day on average. Since there are no analyticals, we made a few assumptions about the salt content of the brine and it is estimated that 184,802 bbls would generate ~9,000 tons of salt per day.

Although technology has been developed to generate 99.999% pure salt, not at that large scale yet. What do you with that much salt? Rather than treat this as a waste and take it to landfills or injection wells, we need to beneficially reuse the salt by creating more jobs to turn the salt into products.

The second formation they talked about was limestone. Limestone mines could be mined using the pillaring method thus reducing the chances of subsidence while beneficially using the limestone and not having the waste stream the salt caverns would have. Most of the limestone locations identified are in West Virginia. Perhaps the answer is a combination of the two.

Here are a few of other issues the group discussed:
1. Marketing – How do you market the tri-state area to the rest of the world for investment purposes? The Tri-State Coalition is developing a new name for the area along with new marketing material so that hopefully when people hear the new name when released everyone will soon relate it to the Marcellus Utica play/development.

2. Infrastructure – There is a need for both pipelines and site preparation.
a. Pipelines – Regardless of where the ethane storage hub will be located, pipelines will be needed to transport the ethane to the hub. This will create jobs and economic opportunities for all.
b. Siting for a second plant – It is estimated that a cracker plant would need about 650-800 acres of land. Unlike Shell who chose to develop its own plot, the Coalition is looking for ideal locations to locate a second plant; one with the necessary infrastructure already in place or more easily put into place to reduce the obstacle for a second cracker plant.

3. Workforce – Thousands of jobs are going to be need filled that require skilled
trades such as pipefitters and iron workers. There are a few colleges and tech schools that offer degrees for these types of jobs; but the local unions such as the Operating Engineers, Iron Workers, Plumbers & Pipefitters and IBEW have apprenticeships and/or trade/training facilities within their organizations to train new recruits the skills necessary to perform high quality work while maintaining high safety standards. There was also talk about the need for more CDL drivers and how to attract more people to that line of work.

4. Research and Development – Although there was talk about how universities where helping to advance some R&D, it was brought up that some state regulations/laws could be modified to make it easier for small companies to do R&D with less red-tape.

5. Permitting, fees, taxes, doing business – Each state has its own intricacies when it comes to these issues, but here are just a few examples of items discussed:
a. PA DEP permitting fees – PA DEP is in the process of proposing higher permit fees almost across the board. So, whether you need an air, mining, water or drilling permit most likely you will be seeing a higher fee once DEP continues with the process of seeking an increase. There were two bills introduced in the House (HB 2304 by Rep. Fritz and HB 2253 by Rep. Wheatley) to introduce the concept of multi-well permits. HB 2253 contains several issues which includes the multi-well permit fee concept giving DEP broad authority in developing it and creates a severance tax. HB 2304 tightens up the parameters and scope that DEP would have to follow when implementing a multi-well permit and provides some language regarding well bore deviation. However, like the other bill it too is languishing in committee. Although the concept could save time and money for both sides, the devil is in the details and hopefully they can be worked out and get on the Governor’s desk before the end of session in November.
b. Taxes – Even without a severance tax, the Dept. of Community and Economic Development stated that it cost about 5% more to do business in PA than in the Gulf Coast. Some of that has to do with the high taxes and/or impact fees on businesses. If PA wants to change its image, then it has to do better for businesses trying to operate in the state.
c. Permits – Just recently I was informed that an operator in Ohio would like to drill under the state-line into West Virginia, but Ohio doesn’t allow it. If the Coalition is looking to advance the shale play, then they should develop permits to allow operators to drill under state-lines and for that matter to have an ethane storage hub sit across state-lines.

6. Money – The Appalachia Development Group is pursuing a $1.9 billion loan guarantee with the Federal Department of Energy. This potential funding will be used to fund the storage hub and pipeline system necessary for development of the petrochemical industry across Pennsylvania, Ohio, and West Virginia. The estimated cost of this project is $3.4 billion but it is estimated that it will generate another $36 billion of investment in other related businesses.

 

There will be more to come from this group who all want to advance economic growth while protecting the environment and its citizens.

 


Want more information or have a question, contact Teresa at 717-329-6402 or Teresa@TDConnections.com or learn more about TD Connections at https://bit.ly/2JE3fbM.

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