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Appalachia storage hub prospects map by FracTracker

Storing Natural Gas Liquids in Appalachia

Last month, the Department of Energy (DOE) submitted a report titled Ethane Storage and Distribution Hub in the United States to Congress. The report sums up several other recent geologic studies and economic analyses that evaluate the potential to create a large petrochemical hub in southwest Pennsylvania, Ohio, West Virginia, and northeastern Kentucky.

Most people call this region Appalachia because of the mountains, or the Ohio River Valley because of the namesake river. The petrochemical industry looks deeper: they’ve branded it Shale Crescent USA, after the shale gas thousands of feet underground. This article summarizes recent developments on storing natural gas liquids, including ethane, in this region – whatever you prefer to call it.

Background

The United States currently produces more natural gas than any other country in the world, with much of the fracked gas coming from the Marcellus and Utica shales in Appalachia. The DOE report predicts that production in this region will continue growing from an estimated at 8.19 trillion cubic feet (Tcf) in 2017, to 13.55 Tcf in 2025 and 19.5 Tcf in 2050.

Natural Gas Production Estimates:

8.19 Tcf in 2017
13.55 Tcf in 2025
19.5 Tcf in 2050

In addition to oil and gas, fracking produces natural gas liquids (NGLs), such as ethane, propane, and butane. NGLs are a key component of the petrochemical industry, which takes these resources and converts them into plastics and resins. As industry extracts more natural gas, it will also be left with more NGLs to manage.

Hoping to profit off NGLs, the oil and gas industry is investing in petrochemical production. In the Appalachian basin, the DOE predicts that production of ethylene from ethane will reach 640,000 barrels a day by 2025 (this is 20 times the amount the region produced in 2013). The Gulf Coast of the U.S., as well as countries in Asia and the Middle East, are also growing their production capacities. Globally, ethylene production is projected to grow 31% from 2017 to 2025.

The rise of the petrochemical industry is coming at a point when there’s an increasing global awareness of the disaster that is plastic pollution. As much as 12.7 million tons of plastic waste goes into the ocean each year, affecting over 700 species of marine animals. On land, plastic waste is often shipped to less developed nations, where it ends up polluting poor communities and contaminating their drinking water and air.

Nevertheless, politicians in PA, OH, and WV are working hard to attract petrochemical build-out in Appalachia. The region already houses much of the infrastructure needed for a petrochemical hub, such as fracked wells that pump out NGLs and processing plants to separate these liquids from the rest of the natural gas stream. One thing it’s missing, however, is significant capacity to store natural gas liquids – particularly ethane.

Why does industry need storage?

Ethane storage offers several benefits to the petrochemical industry. For one, it would serve as a steady supply of ethane for plants like ethane crackers, which “crack” ethane into ethylene to make polyethylene plastic. With this constant supply (transported to crackers via pipeline), plants can operate 24 hours a day, year round, and avoid using energy to shutdown and restart. Storage also allows industry to adapt to fluctuations in demand. If demand decreases, ethane can be set aside instead of being burned off when a natural gas stream is processed.

Another argument for expanding petrochemical activity in Appalachia is to diversify the industry’s geography. The current petrochemical hub in Texas and Louisiana (where over 95% of the country’s ethylene production takes place) is subject to extreme weather events. In 2017, Hurricane Harvey caused over half of the nation’s polyethylene production capacity to shut down. The report mentions “extreme weather events” multiple times as justification for building a petrochemical hub in Appalachia. This stance strongly suggests that the DOE is preparing for increased hurricanes and flooding from climate change, although this is never explicitly stated. Unsurprisingly, the industry’s role in causing climate change is left out from the report as well.

What does storage look like?

While the term ‘natural gas liquid’ may seem like an oxymoron, it refers to the different forms the substances take depending on temperature and pressure. At normal conditions, NGLs are a gas, but when pressurized or exposed to extremely cold temperatures,  they act as a liquid. NGLs occupy significantly less space as a liquid, and are therefore moved and stored as a pressurized or refrigerated liquid.

Storage can be in above ground tanks, but is often underground in gas fields or underground caverns. NGLs are highly volatile, and storing them above ground puts workers and surrounding communities at risk. For example – last week, an above ground storage tank exploded at a natural gas processing plant in Washington County, PA, sending four people to the hospital. While underground storage is often perceived as “safer,” it still poses significant risks, particularly in a geography like Appalachia full of wells, coal mines, and pipelines. This underground infrastructure can cause NGLs to leak during storage or the land above them to collapse.

A study out of West Virginia University, titled “A Geologic Study to Determine the Potential to Create an Appalachian Storage Hub For Natural Gas Liquids,” identified three different types of storage opportunities along the Ohio and Kanawha river valleys:

Underground storage options

  1. Mined-rock cavern: Companies can mine caverns in formations of limestone, dolomite, or sandstone. The formation must be at least 40 feet thick to hold NGLs. This study focused on formations of the Greenbrier Limestone, which occurs throughout southwestern Pennsylvania, West Virginia, and Kentucky.
  2. Salt cavern: Developing salt caverns involves injecting water underground to create a void, and then pumping NGLs into the cavern. Suitable salt caverns have “walls” at least 100 feet thick above and below the cavern. The study recommended salt caverns 1,500 to 3,000 feet deep, but considered those as deep as 6,700 feet.
  3. Gas field: NGLs can also be stored in natural gas fields or depleted gas fields in underground sandstone reservoirs. Suitable gas fields are 2,000 feet deep or more according to the WVU study.

Where could storage sites be located?

The West Virginia University study identified and ranked thousands of gas fields, several salt caverns, and many regions in the Greenbrier Limestone that could serve as NGL storage. Most of the top-ranked opportunities are in West Virginia, near the state’s borders with Ohio and Pennsylvania, and several cross beneath the Ohio or Kanawha rivers. The researchers conclude with three “prospects,” which are circled in Figure 1.

A map of storing natural gas liquids opportunities in the Ohio River Valley

Figure 1. NGL storage opportunities identified by the Appalachian Oil and Natural Gas Consortium at West Virginia University

The table below lists the specific storage opportunities in each prospect, as well as the available data on depth, thickness, and acreage of the formations. Also listed are the counties that the storage facility would cross into.

Name Type Depth (feet) Thickness (feet) Counties Land Size (acres)
Salina F4 Salt cavern Salt cavern >100 to 150 Primarily Columbiana, OH, also Hancock, WV & Beaver, PA 83,775
Salina F4 salt cavern Salt cavern 100 to 150 Primarily Jefferson, OH, also Brooke & Hancock WV, & Washington, PA 129,017
Ravenna-Best Consolidated Field Depleted gas field 4,107 to 6,497 25 to 156 Mahoning, OH 69,000
No specific field was ranked Gas field in Oriskany sandstone 3,000 to 7,000 0 to 70+ Throughout the prospect

Existing NGL Storage

Storage in the United States

Currently, the U.S. has two major NGL storage hubs (both in salt caverns): One is in Mont Belvieu, Texas and the other in Conway, Kansas. These facilities are strategically located near the petrochemical industry’s hub along the Gulf Coast. There is also underground storage in Sarnia, Ontario.

Industry in Appalachia is connected to these storage facilities via pipelines, including Sunoco’s Mariner West that transports ethane to Sarnia, and the Appalachia-Texas-Express (ATEX) pipeline that takes ethane to Mont Belvieu. However, as suggested above, NGL storage in Appalachia is also under development.

Appalachia Storage & Trading Hub

Appalachia Development Group LLC is heading the development of the Appalachia Storage & Trading Hub initiative. The company has not announced the specific location for underground storage, but has been working hard to secure the funds  for this development.

In September of 2017, Appalachia Development Group submitted part 1 of a 2-part application for a $1.9 billion loan to the US DOE Loan Program Office. The DOE approved the application the following January, inviting the company to submit the second part, which is currently pending. This second part goes through the DOE’s Title XVII innovative clean energy projects loan program.

According to the DOE, this program “provides loan guarantees to accelerate the deployment of innovative clean energy technology.” Paradoxically, this means the DOE may give clean energy funds to the petrochemical industry, which is fueled by fossil fuels and does not provide energy but rather plastic and resins.

Steven Hedrick, the CEO of Appalachia Development Group, was part of a West Virginia trade delegation that traveled to China in 2017 to meet with China’s largest energy company. This meeting, which included President Trump and China’s President Xi Jinping, resulted in China Energy agreeing to invest $83.7 billion to support natural gas and petrochemical development in West Virginia. (Of note: This agreement has faced uncertainty following Trump’s tariffs on Chinese goods). West Virginia Governor Jim Justice later criticized Hedrick’s involvement in the meeting, where he promoted the interests of his private company.

Mountaineer NGL Storage Project

Another company, Energy Storage Ventures LLC, has plans to construct NGL storage near Clarington, Ohio. This facility would be on land formerly belonging to Quarto Mining Company’s Powhatan Mine No. 4. Called “Mountaineer NGL Storage,” the project would develop salt caverns to store propane, ethane, and butane. Each cavern could store 500,000 barrels (21 million gallons) of NGLs.

The video below, made by the Energy Storage Ventures, describes the process of developing salt caverns for storage.

The Mountaineer NGL Storage Project location is about 12 miles south of the PTTGC ethane cracker (if built), in Dilles Bottom Ohio. It’s also roughly 60 miles south of the Shell ethane cracker (under construction) in Potter Township, PA. If developed, the project could supply these plants with ethane and allow them to continuously operate. According to Energy Storage Ventures President, David Hooker, the project would also trigger $500 million in new pipelines in the region and $1 billion in fractionation facilities to separate NGLs.

Energy Storage Ventures wants to build three pipelines beneath the Ohio River. Two pipelines (one for ethane and one for propane and butane) would deliver NGLs to the storage site from Blue Racer Natrium, a fractionation plant that separates dry natural gas from NGLs. A third pipeline would take salt brine water from the caverns to the Marshall County chlorine plant (currently owned by Westlake Chemical Corp). These facilities, as well as the locations of the two ethane crackers storage could serve, are in the map below. This map also includes the potential storage opportunities the researchers at West Virginia University identified.

View map full screen | How FracTracker maps work

Referring to concerns about building pipelines and caverns near the Ohio River, a drinking water source for 5 million people, the company’s president David Hooker stated, “This is not rocket science. These things have operated safely for years… Salt, at depth, is impermeable. You won’t see any migration out of the salt.”

This video is a rendering of what the 200-acre site will look like, including the salt water impoundment structure (capable of holding 3.25 million barrels), and the infrastructure needed to deliver products and equipment by rail and truck:

The company has stated that it owns both the land and mineral rights it needs to develop the caverns, but the project has also faced delays.

Where is this plastic going?

One common argument for a petrochemical hub in Appalachia is the region’s proximity to the downstream sector of petrochemical industry. Manufacturers such as PPG Industries, Dow Chemical Inc., and BASF are all based in the area and could make use of the feedstock from an Appalachian hub.

However, the report doesn’t make it clear where the plastic and resin end products will land. It does state that the demand in the United States isn’t enough to swallow up two major petrochemical hubs worth of plastic.

Export markets

The DOE report states that, “the development of new petrochemical capacity in Appalachia is not necessarily in conflict with Gulf Coast expansion.” Since the Gulf Coast already has the infrastructure for export, it could focus on international markets while Appalachia meets domestic demand. Alternatively, the Appalachian hub could serve European destinations while the Gulf Coast hub delivers to Pacific Basin and South American destinations. Plastic consumption is highly correlated with population, so countries with large, growing populations such as India and China are likely markets.

It’s important to note that the U.S. isn’t the only country increasing its production of petrochemical derivatives, and as the report notes, exports from the US “may face a challenge from global capacity surplus.” Figure 2 shows that global production of ethylene is expected to surpass global consumption, shown in Figure 3. The graph of consumption likely ignores the impact of plastic-reducing policies that hundreds of countries and cities are implementing. As such, it may be an over-estimation.

Historical and Projected Ethylene Production Capacity by Global Area

Figure 2. Historical and future ethylene production by global region. Source

Graph of ethylene consumption by global area.

Figure 3. Ethylene consumption by global region. Source

In the end, it appears that the industry’s plan is to build first, and worry about markets later, hoping that a growing supply of affordable plastic will increase consumption.

Perhaps the reason industry is so eager to forge a market is because oil and gas is struggling with a lot of debt. A study out of the Sightline Institute found that as of the first half of 2018, “US fracking-focused oil and gas companies continued their eight-year cash flow losing streak.”  The Center for International Environmental Law found that petrochemicals generally have a larger profit margin than oil and gas: “In 2015, ExxonMobil’s Chemicals segment accounted for roughly 10% of its revenues but more than 25% of its overall profits.”

Plastic is one way to subsidize this dying industry…

Beyond Storing Natural Gas Liquids

The motive behind developing storage is to catalyze and support a major industry. The DOE report states that the new infrastructure required “would include gathering lines, processing plants, fractionation facilities, NGLs storage facilities, ethane crackers, and then…plants for polyethylene, ethylene dichloride, ethylene oxide, and other infrastructure.” A hub would require more fracking and wastewater injection wells, cause even more heavy truck traffic that adds stress to roadways, and require additional power plant capacity to serve its electricity demand.

In other words, an Appalachia petrochemical hub would profoundly impact the region. The report contains an in-depth analysis of the economic impacts, but fails to mention any environmental concerns, social impacts on communities, or health effects. The other major studies on this buildout,  mentioned above, follow a similar pattern.

A quick look at industry along the Gulf Coast tells you that environmental, social, and health concerns are very real and produce their own economic debts. The petrochemical industry has created a “cancer alley” in Texas and Louisiana, disproportionately impacting low-income and minority communities. Yet, industry is preparing another hub without a single comprehensive environmental impact assessment or health assessment for the region. As each pipeline, fracked well, and plant is permitted separately, we can’t properly assess the cumulative negative impacts this development will have on our waterways, forests, soil, or air quality. Therefore, we also won’t know how it will affect our health.

Looking into the future

The report analyzes the industry through 2050. It states that NGL output in Appalachia:

… will continue to grow throughout the forecast period. As natural gas production gradually migrates away from liquids-rich gas areas, which are expected to slowly deplete, to dryer areas, the rate of growth in NGPL production will slow relative to the rate of natural gas production growth.

In 31 years, the kids growing up in Appalachia right now could be left with brownfields, dried-up wells, and abandoned ethane crackers. But it doesn’t have to be this way. Last year, the DOE reported that there are more jobs in clean energy, energy efficiency, and alternative vehicles than in fossil fuels. By using funds such as the DOE’s Title XVII innovative clean energy loan – for actual clean energy – we can bring economic development to the region that will be relevant past 2050 and that won’t sacrifice our health and natural resources for short-term private gains.

By Erica Jackson, Community Outreach and Communications Specialist

Name that oil and gas storage container [quiz]

By Bill Hughes, WV Community Liaison

We were recently asked if there is a reliable way to determine what constituents are being housed in certain types of oil and gas storage containers. While there is not typically a simple and straightforward response to questions like this, some times we can provide educated guesses based on a few photos, placards, or a trip to the site.

One way to become better informed is to follow the trucks. The origins of the trucks will determine whether the current stage in the extraction process is drilling or fracturing (the containers cannot be for both unless they are delivering fresh water). Combine that with good side-view photos of the trucks will tell you if they are heavier going into the site or heavier leaving. Look for the clearance between the rear tires and the frame. Tanker trucks can typically carry 4000 gallons or 100 barrels.

For a quick guide to oil and gas storage containers, see the “quiz” we have compiled below:

Storage Container Quiz

1. What is in this yellow tank?

Photo 1

Q1: Photo 1

Q1: Photo 2 (same tank zoomed in)

Answer: This yellow 500-barrel wheelie storage tank in photos 1 and 2 is a portable storage tank, identified in the placard in photo 2 as having held oil base drill mud at one time. Drillers prefer to keep certain tanks identified for specific purposes if at all possible. This is especially true if they have paid extra to get a tank “certified clean” to use for fresh water storage. A certified clean tank does not mean that the water is potable (drinkable).

Other storage containers that hold fresh water are shown below:

Shark Tanks

Shark Tanks

Shark Tanks

Shark Tanks from the sky

2. What is this truck transporting?

Q2: Truck

Q2: Truck

Answer: This type of truck is normally used to haul solid waste – such as drill cuttings going to a landfill. Some trucks, however do not make it the whole way to the landfill before losing some of their contents as shown below.

Truck-spill

Truck spill in WV

3. How about these yellow tanks?

Q3: Photo 1

Q3: Photo 1

Q3: Photo 2

Q3: Photo 2

Answer: The above storage containers are 500-barrel liquid storage tanks, also called “frac” tanks.

In photo 2 you can see that at least one tank is connected to others on either side of it. In this case you need to look at the overall operation to see what process is occurring nearby — or what had just finished — to determine what might be in the container presently.

The name plate on photo 1 says “drill mud,” which means that at one time that container might have held exactly that. Now, however, that container would likely have very little to do with drilling waste or drill cuttings. The “GP” and the number on the sign refers to Great Plains and the tank’s number. These type of tanks do not have official placards on them for the purposes of DOT labeling since they are never moved with any significant liquid in them.

4: What about these miscellaneous tanks?

Q4: Photo 1 – Tank farm with 103 blue tanks

Q4: Photo 2 – Red tanks with connecting hoses

Q4: Photo 3 – Red tanks, no connections

Answer: There is no way to know – unless you have been closely following the process in your neighborhood and know the current stage of the well pad’s drilling process. Tank farms are usually just for storage unless there is some type of filtering and processing equipment on site. The drilling crews (for either horizontal or vertical wells) do not mix their fluids with the fracturing crew. That does not mean that one tank farm could not store a selection of flowback brine—or produced water, or drilling fluids. They would be stored in separate tanks or tank groups that are connected together – usually with flex hoses.

Since I am in the area often, I know that the tanks in photos 1 and 2 were storing fresh water. Both sets were associated with a nearby hydraulic fracturing operation, which has very little to do with the drilling process.  You will never see big groups of tanks like this on a well pad that is currently being drilled.

The third set of tanks with no connections on an in-production well pad are probably just empty and storing air – but not fresh air. These tanks are just sitting there, waiting for their next assignment – storage only, not in use. Notice that there are no connecting pipes like in photo 2. The tanks in photo 3 could have held any of the following: fresh water, flowback, brine, mixed fracturing fluids, or condensate. Only the operator would know for certain.

Inergy Seeks Approval for Gas Storage in Once Deemed Unusable Salt Caverns

By Peter Mantius, Staff Writer, DCbureau.org

Key brine wells of interest at Salt Point on Seneca Lake (click to enlarge)

Key brine wells of interest, Salt Point on Seneca Lake

WATKINS GLEN, N.Y. — A Kansas City energy company is urging New York and federal regulators to disregard explicit warnings about the structural integrity of two salt caverns that it plans to use to store millions of barrels of highly-pressurized liquid propane and butane.

One cavern was plugged and abandoned 10 years ago after a consulting engineer from Louisiana concluded that its roof had collapsed in a minor earthquake. He deemed the rubble-filled cavity “unusable” for storage. It is now scheduled to hold 600,000 barrels of liquid butane.

The other cavern sits directly below a rock formation weakened by faults and characterized by “rock movement” and “intermittent collapse,” according to a 40-year-old academic study that cautioned that the cavern might be plagued by “difficulties in production arising from the geological environment.” That cavern is scheduled to hold 1.5 million barrels of liquid propane.

Both warnings were overstated, according to Inergy LP, which begins the fourth year of its bid to obtain an underground storage permit from the state Department of Environmental Conservation. “There is no reason to believe now that a roof cavern collapse did in fact occur,” Inergy wrote in a confidential 2010 report to the DEC.

The company claims its own tests show the caverns to be structurally sound and suitable for storing the liquefied petroleum gases, or LPG, under pressure of 1,000 pounds per square inch.

Public details of contrary opinions are scarce because Inergy, which bought the caverns from US Salt in 2008, has insisted that their history is a confidential “trade secret.”

Both the DEC and U.S. Environmental Protection Agency have generally accepted that argument and withheld or redacted many historical documents requested under state and federal Freedom of Information laws. However, the EPA did provide one document to DCBureau that disclosed the name of the Louisiana consulting engineer—Larry Sevenker.  The DEC later released documents that summarized Sevenker’s 2001 analysis of “Well 58,” the entry point for the cavern now set to hold liquid butane.

Those records and recent interviews with Sevenker reveal the DEC’s concerns about Well 58 and other Seneca Lake salt caverns in early 2001 following a series of catastrophic gas explosions in Hutchinson, Kansas.Sevenker had made many trips to the Watkins Glen brine field to study wells and caverns for US Salt and predecessor companies before US Salt hired him to report on Well 58. Dug in 1992, the well was originally used to mine salt by extracting brine, but US Salt had plans to eventually use the cavern to store compressed natural gas.

However, Sevenker’s findings convinced US Salt’s local manager, Alan Parry, to plug and abandon the cavern surrounding the well, according to a once-confidential letter.

“Our intentions for this well are to plug and abandon on the advice of our consultant, Mr. Sevenker,” Parry wrote the DEC on May 24, 2001. “He clearly states in his report that the roof movement is unusual and renders the cavity unusable for continued development or storage.”

Days later, Kathleen Sanford, a DEC permit administrator, wrote to New York State Electric and Gas to request a report on the integrity of nearby salt caverns NYSEG was using to store compressed natural gas. In particular, she wanted to know if its storage caverns had been affected by the Well 58 roof collapse “that occurred sometime prior to Feb. 12, 2001.” She said her questions “are in response to the Hutchinson, Kansas, incident.” … Read more