NETL Economist Sees Petrochemical Potential in Region
Appalachia has a great opportunity to become a petrochemical and manufacturing center using low-cost natural gas liquids from the Marcellus shale, a senior economist from the National Energy Technology Laboratory (NETL) told a virtual audience last week.
Justin Adder, a Washington & Jefferson College graduate, was the presenter at W&J's Center for Energy Policy and Management’s most recent webinar. He spoke about “The Appalachian Region’s Natural Gas Future: A Generational Opportunity.”
Adder is part of the energy markets analysis team in Pittsburgh that was responsible for developing “The Appalachian Energy and Petrochemical Renaissance: An Assessment of Economic Progress and Opportunities,” a report released earlier this year that outlined how the Appalachian Basin can become a downstream hub.
“I truly do believe the Appalachia natural gas industry is on the brink of something great,” he said, outlining his reasoning for keeping Marcellus shale “wet gas,” or natural gas that contains high-value liquids (NGLs) such as ethane and butane, in this region for end uses, instead of shipping large amounts to the Gulf Coast and other regions, as is now happening.
He noted that Shell’s construction of a petrochemical plant in Beaver County, and PTTGC’s study of a potential plant in Belmont County, Ohio, “lends itself to the importance of these low-cost ethane resources.” Ethane is converted into ethylene, a building block for plastics products, through a high-temperature chemical process at plants like the Shell cracker.
Without enough uses for the ethane in this region, much of it is being allowed to remain in the natural gas stream and used for other purposes, such as energy generation. “High-value ethane is being sold and utilized at the same price as natural gas and that’s a shame,” he said.
He pointed to the Petrochemical Supply Chain Visualization Tool being being developed by NETL that maps the entire supply chain from the wellhead to end use consumers in both the Gulf Coast and Appalachian regions to analyze the regional landscape and determine its strengths and weaknesses. Merril Stypula, a senior consultant at Deloitte who is working with NETL on the project, gave a demonstration of the tool, which is still being tested.
“One of the most important points, and one I was not expecting, is that the refining and processing infrastructure phase along the supply chain really represents a fantastic opportunity for Appalachia,” Adder said, noting that the abundant natural gas supply could support up to four more cracker plants. However, the development of a large underground gas storage hub to ensure a steady supply of feedstock is needed.
The tool identifies the manufacturing and chemical-related businesses that depend on natural gas products and found that there are a significant number in Appalachia who could benefit from local refining and processing. Now, much of the Appalachian natural gas is sent to the Gulf Coast for processing, only to be moved back up to this area to “feed our robust manufacturing industry,” he said.
The NETL, which is one of 17 national research laboratories, recently started a Natural Gas Utilization Center of Excellence, which is focused on developing technologies to create high-value products from NGLs and bringing that technology into the manufacturing arena.
Adder was asked if the Appalachian region buildout will occur given the present economic situation due to COVID-19 and low prices.
“There’s an overall uncertainly,” he said. “Whether politics or the perception of global warming, a lot of companies are taking a step back from fossil fuels. It is a struggle, but not one that could not be overcome.”