NATURAL GAS LIQUIDSOhio NGL Project Lands First Customer in Possible Breakthrough for Appalachian Hub
Plans for an underground natural gas liquids (NGL) storage facility in Ohio seen as key to the region’s pet-rochemical build-out have moved another step closer to reality as the backer of a multi-billion dollar ethane cracker has signed a preliminary agreement to further its development.
Energy Storage Ventures LLC (ESV) and an affiliate of Thailand’s PTT Global Chemical pcl (PTTGC) have entered a precedent agreement outlining the terms and conditions of developing the early stages of the Moun-taineer NGL Storage project. Under the deal, Mountaineer would provide one million bbl of ethane storage
PIPELINESDAPL Awaiting Appeals Court Decision on Operations Status
It’s now a waiting game for the Dakota Access Pipe-line (DAPL) after both sides in the oil pipeline’s ongoing legal battle have had their say regarding the motion to stay a lower court’s order to temporarily shut and empty the system.
In a filing Thursday (July 23) in the U.S. Court of Appeals for the D.C. Circuit, the U.S. Army Corps of En-gineers and DAPL disputed the Native American Tribes’ argument, filed earlier this month, that “temporarily shut-ting down the pipeline means that it will be marginally more expensive for some producers to ship oil out of North Dakota — nothing more.”
NEWSExxonMobil, Partners Discover Carbon Capture Technology for Industrial Sources
A possible breakthrough in technology that could capture more than 90% of carbon dioxide (CO2) emitted from industrial sources has been announced from scien-tists at ExxonMobil, University of California, Berkeley and Lawrence Berkeley National Laboratory.
Laboratory tests on the patent-pending material, tetraamine-functionalized metal frameworks, could be used to capture CO2 emissions up to six times more ef-fectively than conventional amine-based carbon capture technology.
The material uses low-temperature steam, thus requir-ing less energy for the overall carbon capture process. Ac-cording to ExxonMobil, the material has the potential to eventually be applied in the commercial sector.
Notes: Table represents fixed-price delivered-to pipeline transactions in USD/MMBtu. These data are comprised of deals that NGI believe represent trading activity in the respective resource plays and may contain gas that was produced from conventional formations. * Denotes a tight sands formation. Volumes may not total due to rounding. For more information, please see NGI’s Shale Price Methodology.
The Tribes, led by Standing Rock Sioux, noted that “oil production in North Dakota has fallen dramatically in recent months due to factors unrelated to this case” and
said DAPL’s continued operation “exposes the Tribes to ‘catastrophic risks’ that have never been properly exam-ined as the law requires.”
DAPL countered, indicating “there is little common sense support for the proposition that dig-ging harder gets you out of a hole faster.” The “ir-reparable harm” of shutting down the 570,000 b/d pipeline “would be substantial.” It further argued that amending the vacatur order to allow an orderly shutdown “would not solve the problem.”
Potential BottlenecksIn a scenario where DAPL is permanently
decommissioned, rail would transport the marginal barrel, but higher shipping rates would be incurred and Bakken Shale economics would be impaired relative to other plays, according to …cont' pg. 3
UTICA SHALEMontage Strikes Deal to Sell Utica Gathering Infrastructure
Appalachian pure-play Montage Resources Corp. has agreed to sell noncore natural gas gathering assets in Ohio’s Utica Shale to an undis-closed company for $25 million.
Montage said an international company agreed to purchase the in-frastructure, which is in a condensate development area. The transaction is expected to close in 4Q2020. Pro-ceeds would be used to cut debt and improve the strength of the balance sheet.
In a brief operational update an-nounced along with the deal, Montage expects second quarter production volumes to come in at the high end of the 535-555 MMcfe/d announced last month, after rising oil and gas prices prompted it to bring back production curtailed earlier in the year.
Like other Lower 48 operators, Montage shut-in production in April after oil prices fell precipitously and Covid-19 destroyed energy demand. The company primar-ily curtailed liquids-rich volumes from Ohio’s Utica. It returned those volumes to sales on June 1 and said full-year production would increase as a result. The company
is now guiding for 565-585 MMcfe/d this year, or 2% above the midpoint of its previous range.
The company also has lowered its 2020 capital ex-penditures to $120-140 million from the previously an-nounced range of $130-150 million. The spending cut would be driven by continued efficiency gains and is not expected to impact production volumes. The company reports second quarter results Aug. 6.
DAPL Awaiting Appeals Court Decision on Operations StatusContinued from Page 1
Morgan Stanley Research.When Bakken production peaked at 1.5 million b/d
in 4Q2019, DAPL represented 40% of that output, said a Morgan Stanley team led by equity analyst Stephen Byrd. With DAPL in service, researchers estimate that all Bak-ken volumes could be shipped out of the basin via pipeline as of 3Q2021, with pipeline economics including $5-6 transport cost to the Gulf Coast setting the differentials.
“While we believe ample rail capacity exists, we expect shipping rates to the Gulf Coast that range $9-11/bbl would set differentials,” the researchers said.
In a shutdown scenario, Bakken’s price discount to West Texas Intermediate could stabilize in the high single-digit range but would come in wider than the current level
of around $2, effectively weakening in-basin economics, they said. “In the short term, differentials could trade wider than transport economics as crude flows adjust to the large shift in takeaway from the basin.”
At current oil prices, which continue to hover around $40, researchers do not see growth from the Bakken, which moderates the pipeline’s need in the near term. “However, it remains critical to any future volume recovery.”
A Close CallThe D.C. Circuit has not indicated a timeline for a
decision or whether it intends to hear oral arguments in the case, although a decision could come soon if the court rules on the briefs alone.
“It’s a close call, but we still lean to the …cont' pg. 4
Source: Tallgrass Energy LP, NGI calculations. For more info and daily 10am ET updates of this chart, go to natgasintel.com/rextracker.
D.C. Circuit upholding the lower court,” said ClearView Energy LLC analysts.
The ClearView team said the biggest hurdle the Corps and DAPL face is demonstrating that they are likely to prevail on the merits of their appeal, which would direct the Corps to undertake an environmental impact statement (EIS). In addition, analysts think the challenge in delineat-ing the difference between the economic consequences of pandemic-related demand destruction and a closure of the pipeline is “particularly difficult.”
If a stay is denied, the Corps and DAPL would likely turn to the U.S. Supreme Court, but ClearView analysts are not convinced the court would view DAPL’s case dif-ferently than the Keystone XL, designed to move crude from Western Canada to the Gulf Coast. The high court reinstated Nationwide Permit 12 for all oil and gas pipe-lines except Keystone XL. This theory is supported by the case-specific nature of the issue and the fact that there is no guarantee that the appeals of the lower court’s order would succeed, the analysts noted.
Raymond James & Associates Inc. analysts are a bit more optimistic of a positive outcome for DAPL. After consulting with an environmental law expert, the analyst team said the most realistic outcome, with a 70% probabil-ity or higher, would be for DAPL to not be granted a stay from the D.C. Circuit, but rather at the Supreme Court.
However, if a stay is not issued, then DAPL likely would begin a three-month shutdown process and could remain offline for more than a year during an expedited EIS process.
“Given that this would spill into what appears to be a high probability of a Biden administration, the Corps leadership would change somewhat,” Raymond James analysts said. This would open the debate on whether the Corps would grant the water crossing permit after the EIS process or the lower court would “accept” the expedited EIS process as an adequate review.
“In short, we don’t like DAPL’s chances in that sce-nario — but ultimately view it as the less likely outcome of the two,” Raymond James analysts said.
“This innovative hybrid porous material has so far proven to be more effective, requires less heating and cooling, and captures more CO2 than current materials,” said Vice President Vijay Swarup, who is in charge of research and development for ExxonMobil Research and Engineering Co.
Through manipulating the structure of the metal organic framework material, the team of scientists and students are able to condense the surface — originally the size of a football field — into only one gram of mass, which acts as a sponge for CO2.
It took ExxonMobil’s team, led by senior research associate Simon Weston and UC Berkeley professor Jeffrey Long, eight years to develop the hybrid porous metal-organic materials which prove stable in the pres-ence of water vapor, without oxidation, thus allowing CO2 to be captured from various sources, under numer-ous conditions.
The results of the research were published in the peer-reviewed journal Science. Additional research and development is needed to bring the technology to a larger scale, and ultimately the industrial scale.
ExxonMobil has invested roughly $10 billion toward re-search and development projects focused on lower emission en-ergy solutions since 2000. The supermajor is also working to expand its collaborative efforts with more than 80 universities, five energy centers, and multiple private sector partners in order to develop next-generation energy technologies.
Earlier this month, Exxon-Mobil renewed a collaboration with Princeton University‘s Andlinger Center for Energy and the Environment to continue research on lower emission tech-nologies and energy solutions.
In similar news, technology that could reduce emissions and energy intensity associated with refining crude oil was revealed in a joint research publication from scientists at ExxonMobil, the Georgia Institute of Technol-ogy and the Imperial College of London.
The advanced membrane, which has been in the works since 2014, separates light shale crude oil while not only producing fewer emissions, but also using considerably less energy than tra-ditional, heat-based
ExxonMobil, Partners Discover Carbon Capture Technology for Industrial SourcesContinued from Page 1
for PTTGC’s proposed cracker.PTTGC America (PTTGCA) said a pipeline would
link the storage facility, which is to be sited along the Ohio River in Monroe County, with the cracker in Belmont County, to be located just eight miles north.
The agreement is a major breakthrough for the Moun-taineer project. Goldman Sachs-backed ESV started work-ing on the project in 2016, but it’s taken time to advance the facility as the company has searched for customers and dealt with regulatory delays. PTTGCA is …cont' pg. 7
Ohio NGL Project Lands First Customer in Possible Breakthrough for Appalachian HubContinued from Page 1
distillation methods, which are commonly used in the refining process. Membranes created by the team of scientists proved to be twice as productive as most com-mercial membranes in use today in the gasoline and jet fuel range.
“Inspired by reverse osmosis tech-nology that has reduced energy inten-sity tenfold for water purification, we decided to look into ways to use new materials for liquids separation, which if brought to industrial scale, could sig-nificantly reduce associated greenhouse gas emissions,” said Swarup.
The research, published in the inter-national peer-review journal Science, demonstrates that naphtha and kerosene — the primary components of gasoline and jet fuel — can
be separated from light crude oil using pressure, as op-posed to heat.
Mountaineer’s first tentative customer. Mountaineer intends to build in two stages to create
storage capacity of more than 3 million bbl, which could be expanded if the market develops. The first phase would include three caverns in the Salina salt formation, with a capacity of roughly 500,000 bbl each. The second phase would double that.
A key salt solution mining permit with the state expired earlier this year in another setback for the Moun-taineer project, but the company confirmed that it since has been reissued that permit and is still on track to start construction this year.
Natural gas storage and salt solution mining are nothing new in Ohio, but NGL salt storage caverns are more complex. Part of Mountaineer’s regulatory delays stemmed from the fact that state regulators were unac-customed to the company’s application, with regulations governing the type of underground storage spread across various state agencies that led to a time-consuming per-mitting process.
Mountaineer’s facility would be the first of its kind in the heart of the Marcellus and Utica shales.
“Our storage facility will have an important role in
managing the plant’s supply portfolio, along with offering PTTGCA and other prospective customers an option to manage seasonal and operational demand with competi-tive locally priced production,” said Mountaineer Presi-dent David Hooker.
The partnership is also a major notch in public and private sector efforts to develop an NGL hub in the Ap-palachian Basin that would better utilize abundant uncon-ventional natural gas supplies.
Royal Dutch Shell plc is building a large ethane cracker in nearby western Pennsylvania.
More storage is seen as a vital link to creating an NGL hub that proponents say could ease supply and demand imbalances and create more regional buyers and sellers of the commodities, similar to one that exists in Mont Belvieu, TX.While PTTGCA lost its equity partner earlier this month and has delayed a final investment decision, the company plans to move ahead with the project and find another backer. The first phase of site preparation and engineering work has been completed, while nearly 500 acres of land for the plant have been purchased and all major regulatory hurdles have been cleared.
