Petrochemical hub in the East to be created by 20 X increase in ethane production

The United States is endowed with significant NGLs resources, and the application of unconventional production techniques has unlocked the potential for these resources to be brought to market. The largest growth in ethane production over the next two decades will come from the Permian basin in the Southwestern U.S. and the Marcellus and Utica basins in Appalachia.

Ethane production in Appalachia is projected to continue its rapid growth in the coming years, reaching 640,000 barrels per day in 2025 – more than 20 times greater than regional ethane production in 2013. Industry has made significant investments in natural gas and NGLs infrastructure to support the boom in production in Appalachia over the past decade. Between 2010 and 2016, natural gas processing capacity increased tenfold, and fractionation capacity in the Appalachian region increased from 41,000 b/d in 2010 to nearly 850,000 b/d in 2016, and may grow as high as 1.1 million b/d in 2019. Underground storage projects are being considered, and a world-scale ethane cracker is already under construction in Pennsylvania.

A NGLs hub requires a concentration of physical assets that connect to supply and demand sources via different transport, storage, and distribution options. Storage of NGLs is necessary for a hub since produced volumes typically exceed the pipeline takeaway capacity and processing capacity. Storage helps mitigate production volatility and in turn reduces risk for those end users that need a steady and reliable stream of feedstock, including the petrochemical industry.

Appalachia’s abundant resources coupled with extensive downstream industrial activity may offer a competitive advantage that could enable it to displace marginal producers and help the U.S. gain global market share in the petrochemical industry. Nearly one-third of U.S. activity in the petrochemical ecosystem occurs within 300 miles of Pittsburgh, with over $300 billion of net revenue, 900,000 workers, and 7,500 establishments.

U.S. petrochemical manufacturing capacity and growth is poised to continue expanding given the expectation of shale production, though the geographic distribution is evolving and not yet clear. Projected, but unspecified to a particular region, incremental petrochemical capacity will generate nearly $227 billion in revenue between 2018 and 2040. Today, over 95% of U.S. ethylene production capacity is located in Texas or Louisiana. Expanding the petrochemical asset base beyond the Gulf Coast would enhance geographic diversity of this industrial sector and support reliability in the petrochemical industry. The development of new petrochemical capacity elsewhere is not necessarily in conflict with Gulf Coast expansion; new capacity may serve regional demand for NGLs derivatives, freeing up Gulf Coast production for other markets, including exports overseas

https://www.energy.gov/sites/prod/files/2018/12/f58/Nov%202018%20DOE%20Ethane%20Hub%20Report.pdf