No, this is not the Whoville located south of Mt. Crumpit within the mountainous high range of Pontoos. And there is no Grinch in this Houville, at least during the 2012 Christmas season. Instead, this Houville is the center of an emerging Marcellus/Utica based NGL hub soon to take its place among the largest in North America.
Over the next couple of years, almost 500 MB/d of new fractionation capacity will be built in the region, and it will start filling quickly. Sometime in 2016 or sooner, Houville will blast past Conway as the second largest Y-grade hub in the country, exceeded only by Mont Belvieu. That’s a big deal. So we need to spend some time understanding what is happening in this Houville, the big new NGL hub in Marcellus/Utica.
By the end of 2014, the northeastern U.S. will go from about 100 MB/d of NGL fractionation capacity to nearly 600 MB/d. That’s because wet gas production is growing by leaps and bounds in both the Marcellus and Utica. And just like we saw in Mont Belvieu (see Ready, Set, Go), the processing, transportation and fractionation infrastructure is trying desperately to keep up. Producers are aggressive and willing to partner with midstream companies to ensure their production is interrupted as little as possible. The vast majority of these midstream deals are supported by long term fee based agreements.
And also like Mont Belvieu, the sooner players get there, the better. There are lots of producers waiting anxiously to maximize netbacks on their production of NGLs, some of which is ethane now being rejected, or other products being transported long distances for fractionation, storage or simply to find a market. Remember, NGL’s aren’t of much value until they are fractionated (i.e., split) into purity products: ethane, propane, normal butane, isobutane, and natural gasoline. There is a very long history of processing and fractionation in the region, but nothing like the scale of what is happening now. We’ll get into those big developments in a minute.
Comments
Thanks so much for this excellent information about fractionation in the northeast.
You write that "Gas plants have rejected ethane so that it ends up in the residue gas stream." Has the volume of ethane been low in the past because mostly dry gas was processed? Or, are large volumes being rejected?
Best regards,
David Passmore
Penn State
In reply to Helpful! by David Passmore
David
Here’s an educated guess. As Callie says in today’s blog, NGL production in PADD I has averaged 43 Mb/d so far this year. Basically none of that is ethane. She also mentions that the % ethane in Marcellus shale gas is greater than 50%. Legacy Appalachian gas is probably less than 50%. So let’s call the average today 50%. In that case, 43 Mb/d of ethane would be the rejected volume. Thus if ethane could be moved today, total NGL production in PADD I would be 83 Mb/d.
Rusty
In reply to PADD I ethane rejection volume by Rusty Braziel
Is there any way that new fractionation capacity could be supportive of NGL prices, or will this add further downward pressure on pricing, in your opinion?
thanks in advance,
Mike