Cracker Plants
The Marcellus and Utica shales are rich in ethane, which is one of the natural gas liquids in wet shale gas. In fact, they鈥檙e so rich with ethane it蘑菇视频 a problem for drillers because they have to get rid of it. Sometimes a driller burns the ethane (which is increasingly more difficult due to regulations), sometimes he mixes it with the natural gas stream (diluting the gas to its lowest acceptable limits), and a few lucky drillers have long term ethane supply contracts with cracker plants.
A cracker plant converts ethane to ethylene. Ethylene is one of the most important chemicals in manufacturing; it is the basic building block of plastics and resins. Ethylene蘑菇视频 molecular structure is a double bond; a double bond is a chemical bond between two chemical elements involving four bonding electrons instead of the usual two. Double bonds are electron-rich, which makes them reactive. The cracker plant heats the ethane to temperatures so hot (over 1000 degrees Celsius, or 1800 degrees Fahrenheit) that it breaks apart the molecular bonds of the ethane, which creates ethylene. Breaking apart molecules is called 鈥渃racking,鈥� hence the name cracker plant. Cracking molecules should not be confused with splitting atoms (nuclear power).
Ethylene is widely used in the chemical industry, and exceeds that of any other organic compound, because it is reactive and well-suited for many different chemical reactions. Ethylene is the base material for plastics, resins, adhesives and just about every synthetic product used in everyday life. It蘑菇视频 the primary material for plastic cups and plastic ware, food wrap, polyester, football helmets and just about any plastic item you can think of. Ethylene is also used in chemicals that are found in antifreeze, pharmaceuticals and textiles. Ethane can be a significant profit center for a Marcellus/Utica region driller 鈥� but only if he can sell the ethane to a cracker plant.
Unfortunately, there are no cracker plants in the Utica Marcellus shale region, so if the driller is lucky enough to be able to sell the ethane to a cracker plant, it has to be transported (usually by pipeline) to cracker plants in Canada or the Gulf. Hence, a cracker plant in the region would make drilling and mineral rights in the region much more profitable.
A typical 鈥渨orld scale鈥� cracker plant costs $5 billion to build. It would be a boon to the local economy because it creates thousands of jobs during construction, and once the plant is operating, it creates between 350 and 1,200 permanent jobs. The regional economic impact from a single cracker plant is $20 billion. Royal Dutch Shell may be building the first cracker plant in the Marcellus Utica shale region in Beaver County. This project and its impact on the region is so important, the state of Pennsylvania has reportedly promised Shell over $1 billion in tax breaks over 25 years to the project as an inducement.
The Ohio Oil and Gas Association says it蘑菇视频 about time we get our own ethane cracker and help out more than just a few who are able to export ethane out of the region. It蘑菇视频 time to turn ethane from an expense into a profit center: With potential local profits flowing to either the Gulf Coast or Canada, the head of the Ohio Oil and Gas Association hopes at least one cracker plant opens in the Marcellus and Utica shale region.
鈥淐urrently, it is more of a waste than an asset,鈥� Shawn Bennett, senior vice president of the association, said of ethane. 鈥淲e are in need of an ethane cracker in this region to help us gain value. That would help increase demand, which would help us get more drilling going again.鈥�
Antero Resources is a big driller focused on the Marcellus and Utica Shale region. The company now has 493,000 acres leased and projects they could potentially drill wells on up to 5,000 locations across that acreage. From the wells already drilled, Antero is now pumping (or close to pumping) one billion cubic feet of natural gas per day. Since a lot of Antero蘑菇视频 operations are in the 鈥渨et gas鈥� area, they also produce a lot of ethane.
The problem is, if you don鈥檛 have a long-term ethane supply contract, your competitors are making money on ethane while you鈥檙e still spending money to get rid of it. That is why Marcellus/Utica regional ethane cracker plants are so desperately needed.
David Pearl is vice president of Infinity Resource Group, Inc., a professional mineral rights consulting firm, specializing in the leasing and sale of mineral rights in Pennsylvania, West Virginia and Ohio. He is also managing director of a natural gas fuel dispensing patent holding company and director of a natural gas fuel island development company. Your questions are welcomed by calling 412-535-9200 or by emailing IRGOilGas@gmail.com.