Firms reach deal for first ethane shipment from Marcellus

Christopher E. Smith
Technology Editor-Pipelines/Midstream

Warren R. True
Chief Technology Editor-LNG/Gas Processing

Ineos Europe AG, Switzerland, has agreed to ship ethane out of the Marcellus area in western Pennsylvania to Europe through the Sunoco Logistics LP-operated Mariner East pipeline for use in Ineos's European crackers.

The company has agreed to a long-term deal with Range Resources—Appalachia LLC for lifting ethane from the Marcus Hook terminal starting in 2015. The agreement is contingent on approval by the US Federal Energy Regulatory Commission of the Mariner East pipeline. As anchor shipper, Range would have firm transportation of 40,000 b/d (20,000 b/d ethane, 20,000 b/d propane).

Range also would have access to what it describes as a very significant pro rata share of the 1-million bbl of propane storage at Marcus Hook and could use its full capacity commitment for propane deliveries until the ethane facilities are in place. In addition to Marcus Hook's truck and rail off-loading facilities, potential exists for Range to deliver propane to Mid-Atlantic customers should Sunoco decide to deliver propane through its northeast pipeline system and expand its existing terminal assets.

Ineos also finalized pipeline transportation services and terminal services agreements with subsidiaries of Sunoco for shipping ethane from gas processing near Houston, Pa., to Marcus Hook. The agreements will be valid for 15 years and provide Ineos Olefins & Polymers Europe with "supply options for the future," the company said. Ineos expects that, when completed, Mariner East will move about 70,000 b/d of ethane and propane from MarkWest Energy Partners LP processing facilities at Houston, Pa., to Sunoco's Marcus Hook terminal and dock near Philadelphia. Ethane will then be separated by fractionation and held in storage ready for shipment to Europe. Ethane from Mariner East will become available first-half 2015 after additional treatment capacity is constructed at Marcus Hook. Propane shipments will start second-half 2014 (OGJ Online, Aug. 10, 2012).

In the meantime, MarkWest is transporting on behalf of Range a portion of its Houston-sourced propane to Marcus Hook by rail for sales to domestic and international customers. Walter M. Hart of IHS-Purvin & Gertz noted that a few shipments of propane have lifted from Marcus Hook this year, describing them as the first shipments of propane from the US Northeast since the 1990s.

Ineos Olefins & Polymers Europe operates as a business unit within Ineos Europe AG running an olefins portfolio built around four key integrated cracker and derivative complexes:

• Grangemouth, UK.

• Koln, Germany.

• Lavera, France (Naphtachimie—a 50:50 joint venture of Ineos and Total Petrochemicals).

• Rafnes, Norway.

Peter Fasullo, principal and cofounder of EnVantage Inc., remarked that the trans-Atlantic shipments would be the first overseas transportation of purity grade ethane, such trade more typically occurring on shorter routes like the North Sea market.