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Western Pa. natural gas destined for Europe
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By Tim Puko
Published: Wednesday, September 26, 2012, 12:01 a.m.
Updated: Tuesday, February 19, 2013
More natural gas from Western Pennsylvania will flow to Europe as part of a Philadelphia company's new export pipeline project, a company official said on Tuesday.
Sunoco Logistics Partners LP will pipe ethane and propane from the MarkWest Energy Partners LP plant in Washington County for export from the Philadelphia area. The company is courting contracts to fill a daily eastbound capacity of 65,000 barrels, most destined for Europe, said Rich Billman, a business development official at the company who spoke on a panel at the Pittsburgh Chemical Day conference.
Sunoco Logistics Partners LP plans to build a plant in Philadelphia to separate the ethane from the propane, said Kevin Hawkins, the investor relations manager at MarkWest. Drillers in the region will get a premium on liquid gases coming from shale fields such as the Marcellus if they sell them out of a nearby port to premium European markets, said Jim Crews, Charleston-based vice president of the company's Northeast business development.
“European chemical companies are on the margins because of the high price of their feedstock right now,” Crews said. “They have an insatiable appetite for our gas.”
He said the company tested the market and had all offers snapped up.
Sunoco Logistics and MarkWest have promoted their Mariner East and Mariner West projects to Ontario and Philadelphia as a way to create new markets for natural gas liquids, including ethane and propane. Prices for those commodities plummeted earlier this year because of supply gluts from new drilling.
Philadelphia almost certainly could be one of two or three new or expanded propane export terminals in the country. Existing gas storage sites there would help decrease gas costs, giving the region an advantage, said conference speaker John Stekla, director of ethylene studies for IHS Chemicals in Houston.
Gas exports have been a hot topic nationwide since the gas drilling boom started about four years ago. Producers and pipeline companies want to export all types of gas to prop up domestic prices that plunged from oversupply. The federal government has held up additional methane exports while it examines the effects of exporting gas on U.S. prices and the economy.
Drillers and landowners have profited from the gas boom and the general public should benefit from low prices, said Gordon Seaver, a landowner with gas wells in Mt. Pleasant, Washington County. Yet he said he paid $650 last winter for a two-month supply of propane to heat his foam rubber fabrication shop — $100 more than the year before.
“To me, (exporting U.S. gas) is terrible. ... We have to take care of the people of this country first,” Seaver said. “They're getting this gas out of my ground, out of my property, taking it a few miles down the road to MarkWest and selling it overseas, so my prices went up. That just doesn't make sense at all.”
Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.
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Right. Just wait for our prices to drop. I doubt that will happen in the near future or at all for that matter. The company will make a fortune from Europe sales then after getting rid of the surplus they will cry shortage and raise prices to make another fortune from us.
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