PITTSBURGH—Where will the new markets develop for Marcellus and Utica gas? The answers may be surprising—and it may be best to remember how far the region has come from scarcity to abundance.

Stuart Nance, marketing vice president for Reliance Holding USA Inc.—the domestic unit of India’s Reliance Industries Ltd., opened a panel discussion Jan. 26 at Hart Energy’s eighth annual Marcellus Utica Midstream Conference by looking back 40 years, almost to the day. The panelists discussed two new markets for Appalachian production, ethane exports and domestic power generation.

“I found in researching this topic that President Jimmy Carter came to Pittsburgh on a surprise visit on Sunday, Jan. 30, 1977,” Nance said. “When he got here, this is what he found: There were emergencies that had been declared, schools were closed, factories were shut down and church services canceled all throughout Pennsylvania” because of curtailments by the gas transmission systems.

“We’ve come a long way; there’s a lot of contrast,” Nance observed.

He focused on ethane. He pointed to U.S. Energy Information Administration data that show domestic ethane production was below 1 million barrels per day (MMbbl/d) at the start of 2013 and is forecast to climb to 1.8 MMbbl/d by late 2018. Domestic consumption has steadily climbed, and exports—which were nonexistent before late 2013, will reach about 400 Mbbl/d by 2018.

“The estimate is that we’re rejecting 500,000 to 600,000 [barrels per day] of ethane going back into the natural gas system,” he said. “We will take ethane that’s being rejected and put it to beneficial use in crackers that are being built, as well as exports.”

Exports go through three points:

  • Canada via pipeline;
  • Marcus Hook terminal outside Philadelphia; and
  • Morgan’s Point terminal on the Houston Ship Channel, served by the Atex Pipeline that moves Appalachian gas to the Gulf Coast.

The flood of ethane into a market with limited demand has sharply impacted prices, Nance said, noting ethane prices peaked at about 90 cents per gallon (gal) in late 2011 but stood at 17 cents/gal at the end of January. “So, clearly, we still have an oversupply situation,” he added, noting that the tariff for Atex is about the same as the current ethane price, “so it has been a tough deal for those who signed up for it.”

Reliance was one of the first foreign petrochemical firms to switch its steam crackers from naphtha to ethane and relies on “a floating pipeline” of tankers that move NGL to its plants in Nagothane, Hazira and Dahej, India. “It’s a natural fit” for the plants, he said.

That floating pipeline begins with refrigeration and loading equipment in Texas, six 87,000-cubic meter (cm) very large ethane carriers (VLEC), “the first in the world,” Nance added.

And, there is a 170,000-cm storage tank and associated dockage and pipelines in India. He noted the VLEC tankers are roughly 3x the size of the INEOS tankers now moving ethane to European crackers.

He saluted Enterprise Products Partners LP “for doing a phenomenal job” starting up the Morgan’s Point terminal.

The large project was done on a short 18-month schedule. Reliance gains “tremendous optionality and flexibility” as a result, he said. “We feel like it will be a great advantage for us; the pieces are all there,” Nance said, adding that Reliance is actively seeking additional ethane supplies.

Power Generation


There are new domestic markets too, Joe Lloyd, vice president of operations for Dallas-based Panda Power Funds, told conference attendees in his presentation.

Panda is building efficient combined-cycle gas-fired power plants, including the first in the Marcellus region. The 829 megawatt (MW) Panda Liberty Power Project plant in Towanda, Pa., went online in third-quarter 2016. Its 778 MW Panda Stonewall Power Project plant in Leesburg, Va., had its first start early in 2017 and will enter service shortly. The Panda Hummel Station, scheduled for completion in first-quarter 2018, will be the firm’s largest plant at 1,124 MW. The 990 MW Mattawoman Power Project will go up in Brandywine, Md., and is scheduled to start in 2019. The plants will be built on a 30-month schedule once Panda receives a notice to proceed, he said.

The company operates similar plants in Temple and Sherman, Texas.

“Pennsylvania is a great place to be and the local communities have been very supportive,” Lloyd said, adding “we’ve built on what you guys have done” in developing the region’s abundant gas reserves.

The combined-cycle concept “is quite efficient,” Lloyd explained. A gas-fired turbine turns generators, then exhaust heat from that turbine passes through a heat recovery unit and steam generator. The steam turns a second steam turbine that also turns a generator.

The gas-fired train, or Basic Brayton Cycle, amounts to the “suck, squeeze, bang, blow” of any gas turbine, such as an aircraft jet engine. A simple-cycle gas turbine’s exhaust goes to the smokestack at 1,100 degrees Fahrenheit (F). The exhaust coming out of the steam generator is about 180 F, “so there’s a lot of energy you can capture,” Lloyd said.

The steam plant is “no different than any other plant, whether it’s a coal plant, a nuclear plant or oil plant. You use some type of fuel to make steam,” through what is known as a Rankine Cycle plant. Together, the systems create a combined-cycle system.

Like operators at all all gas-fired power plants must do, Panda’s operators have to contend with differing standard days for the gas transmission business—projected gas demand—and the power business—projected power sales.

“It would be nice if the gas industry and/or the electric industry would get together. The electric day runs midnight to midnight and the gas, 10 a.m. to 10 a.m. It would nice if we could mesh those two together. But I don’t think anyone in this room could do that,” Lloyd observed with a chuckle.

Paul Hart can be reached at pdhart@hartenergy.com or 713-260-6427.