The Shale Gas Boom in the U.S. is Reshaping the Energy Industry

Posted by PortVision

Huge reserves of natural gas in the United States could supply the nation’s energy needs for the next 110 years. The country is also set to become one the top global net natural gas exporters by 2018.

The shale gas boom in the U.S. has been growing dramatically in activity since 2008 with the advent of directional drilling and new fracking technologies.shale_gas_map

Extraction via vertical wells has given way to primarily horizontal drilling and hydraulic fracturing, a method of cracking rock layers and introducing a proppant such as water and/or sand to enable the oil or gas to flow out into a well. This procedure has helped increased gas production so much so that both domestic and international markets have been reaping the benefits.

In their Annual Energy Outlook 2014 report, the U.S Energy Information Administration predicts a 56% increase up to 2040 from the production of natural gas, shale gas in particular, which is expected to grow to 19.8 trillion cubic feet (Tcf) in 2040 compared with just under 10 Tcf in 2012.

Much of the focus has been on the Marcellus Shale region which is located throughout most of Pennsylvania and West Virginia, with some areas found in the states of New York, Maryland and Ohio. Not only is this a major resource for natural gas in the U.S. but it’s also one of the world’s top regions as well.

Philadelphia-based Sunoco Logistics Partners L.P., is a company that is taking advantage of the seemingly endless supply of ethane and propane located in this natural gas-rich region.

Currently Sunoco’s expansion phase includes the refurbishment of its Mariner East pipeline, a nearly 300-mile route. Additionally, the facility located on the Delaware River, now called the Marcus Hook Industrial Complex (previously known as the Sunoco Marcus Hook Refinery), is being restaged as a natural gas liquid storage and processing plant, capable of producing 70,000 barrels of propane and ethane initially per day, with more on the horizon. 

Propane can be sold domestically or exported, however, the ethane produced will be exported only. Ethane will be processed (chilled) at Marcus Hook before it’s shipped out.

In fact, Sunoco already has two European customers on the books who’ve both signed long-term ethane transportation, processing and terminal agreements; INEOS Europe AG will be shipping ethane to Norway via Marcus Hook beginning in 2015 (INEOS Europe is currently building a fleet of new vessels strictly for this venture), and once phase II of the Mariner East project is completed in 2016, Austria-based petrochemical company Borealis AG will begin importing this in-demand gas as well.

The move to upgrade and increase the East Mariner project has lead to an increase in employment as well. In fact, overall, the State of Pennsylvania has been a significant contributor in this area. In 2012, the State became the sixth largest producer of oil and natural gas employment.

The positive impact on the U.S. economy bodes well for both domestic and international markets. Natural shale gas supplies approximately one-quarter of the nation’s energy supplies, has greatly reduced CO2 emissions that have come from declining coal power plants and by 2015, the industry is expected to generate 870,000 jobs.

With Sunoco’s natural gas expansion quickly emerging, so are opportunities for the marine shipping industry. Asia is also getting into the game, with U.S. LPG exports expected to grow significantly during the next 10 years. And the VLGC (Very Large Gas Carrier) tanker order book also reflects this trend.

As Sunoco Logistics works to complete the Mariner East 1 and Mariner East 2 pipeline projects and continues the Marcus Hook revitalization, additional international companies will get on board and the U.S. will see further exports of natural gas via ships for decades to come -- if all goes according to plan.

 

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Posted on Dec 11, 2014, 4:10:25 PM

Topics: Blog