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PITTSBURGH ̶ When thinking about the Marcellus and Utica shales, people generally don’t think of Philadelphia, but more and more the City of Brotherly Love is becoming an integral part of the midstream in the Northeast by providing crucial outlets for producers.
The Mariner East system is designed to help producers get NGL to market, but also export volumes. “The Mariner East is the pipeline takeaway solution for Marcellus-Utica liquids,” Hank Alexander, VP of business development at Sunoco Logistics, said during Hart Energy’s recent Marcellus-Utica Midstream Conference.
Mariner East is being built in two phases and will grow in importance as production forecasts for Appalachian Basin continue to grow. Liquids production is expected to reach more than 800,000 bbl/d by 2016 and nearly 1.2 million bbl/d by 2020.
The $3 billion Mariner East project will provide the Northeast with a world class NGL hub along with processing at Marcus Hook. “We are repurposing Marcus Hook as an NGL hub to bring Marcellus-Utica shale NGL for distribution to international, domestic and Pennsylvania markets. Our goals are to provide the highest netbacks possible with proximity to premium markets while creating additional opportunities, jobs and spending in Pennsylvania.”
According to Sunoco Logistics, Mariner East will help create processing and manufacturing jobs at the Marcus Hook Industrial Complex while helping to make more propane available to meet winter heating demand in the region.
Phase 1 of the project includes the construction of a 50-mile pipeline connected to existing lines to transport 70,000 bbl/d of ethane and propane from Houston, Pa., to Marcus Hook when it comes online in the fourth-quarter 2014. Mariner East 2 will increase the capacity to transport NGL by 205,000 bbl/d while adding 350 miles of pipeline that will parallel the Mariner East 1 pipeline. This new pipeline will include gathering from eastern Ohio, West Virginia through Pennsylvania to the Marcus Hook Industrial Complex and other delivery points in Pennsylvania when it comes online in the fourth-quarter of 2016.
A major part of the conversion of the Marcus Hook facility from a refinery to an NGL processing center is the ability to provide a long-term supply of propane to both the Northeast region and the Northwest Europe export market.
According to Alexander, local demand for propane is increasing as refineries and local propane terminals are closing and propane storage in the area is still short of market demand. “We are evaluating additional manufacturing opportunities, such as a PDH unit.“
Alexander said that the location was perfect for a petrochemical project as it has existing infrastructure, lower capex, plenty of dock capacity and an uncrowded ship channel. While domestic manufacturing and petrochemical opportunities are increasing, global opportunities are attractive. He noted that the global propylene market is expected to grow by 33 million metric tons by 2020.
“Export options help balance the market, and Marcus Hook offers the ideal location with distribution flexibility with access to local, coastal and international markets. The distribution options at Marcus Hook will yield the highest netback to producers,” he said.
The facility’s fully refrigerated tanks will be capable of loading VLGC’s at 25,000 bbl/hour and offers lower VLGC rates to Europe than the Port of Houston and comparable costs to ship to Japan as the Port of Houston.
“The Port of Houston has several issues not found at Marcus Hook, including a two-day dock window, channel congestion, slower loading rates and potential fog and hurricanes that could delay traffic,” Alexander said.
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