9:00am

Fri March 23, 2012
Energy

New York gas unlikely to end up at Pennsylvania ethane cracker

The recent announcement by Shell Chemical, that it plans to build an ethane cracker near Pittsburgh, figures to be a huge boon for the economy in Western Pennsylvania.

An ethane cracker processes ethane from natural gas operations into ethylene for making plastics.

The new plant is a multi-billion dollar investment, and the governors of Pennsylvania, Ohio and West Virginia all lobbied to bring it to their states.

New York's shared border with Pennsylvania makes it seem logical that the new plant in western Pennsylvania would add to demand for natural gas from New York.

But it won't.

The issue is wet gas vs. dry gas, says Gary Marchiori, president of New York-based EnegryMark. The plant processes ethane, which comes from what's known as wet gas.

"If you go to the wettest gas found in the Southern Tier of New York, it is Chattaqua, Allegheny, Cattaraguas Counties. Now it's also the least likely to be developed for Marcellus," says Marchiori.

The Marcellus Shale is divided into an eastern section and a western section. In the western section, the gas is less mature wet gas, which is useful in the ethane cracker. In the eastern section, which is considered the "sweet spot" for Marcellus exploration in New York, it's more mature, dry gas.

"So for New York - some impact. There's an outlet for the liquids, natural gas liquids, but I can't say that the development of that plant will necessarily create more need to drill in New York," says Marchiori.

The multi-billion dollar plant is still years from completion. Site selection was only the first step in a long process.

And for New York, it's also unclear if or when drilling will happen. State regulators are working on final drilling regulations and natural gas prices are near historic lows.