Cracker Plant

A few questions as the cracker plant is being built:

  • will a resurgence in leasing/pricing start before it is finished?
  • is there enough leased now to supply it?
  • will areas other than the low hanging fruit be needed?
  • how far out will the perimeter extend for supply?
  • what will be needed, wet, dry, hydrocarbons?
  • if wet gas is needed, where is it at? Who could benefit?
  • how will it get there?
  • how will deductions be addressed? deductions for getting it there, deductions for cracking? will deductions make leasing not worth it?

I know this may be a little premature, but hey, it's the middle of winter!! Bored, inquiring minds want to know!

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Permalink Reply by Donald on January 31, 2018 at 4:41am

Very good questions.I don't have answers but I hope we get some. I would like Answers to the same. come on experts , lets hear it.

Permalink Reply by Jim Litwinowicz on January 31, 2018 at 6:42am

First, the plant will be using ethane, a two carbon/six hydrogen molecule. It will convert the methane into ethylene a two carbon/four hydrogen molecule, the building block for most plastics.  Dry gas is methane, single carbon.  Much of the ethane will come from SW PA, some of WV,  and southern Ohio. http://www.timesonline.com/e5e5cc84-63d3-11e6-bffb-4f6fc4a91609.html

North of Beaver Co, Pa has dry gas and very little ethane.  I suspect that there is enough ethane in the supply chain to supply the plant as a lot of ethane is currently being piped south to Tx and Louisiana and also a lot piped to across Ohio and into Canada. I don't see a lot of new leasing because of the plant as most wet gas areas are already leased.

There is a second cracker proposed by a Thailand company that may be built in the Liverpool area.  Plus, the Chinese have committed to investing $87 billion over 20 years in infrastructure, manufacturing, and processing plants in West Virginia.  All of that will probably inspire more leasing and drilling.

It won't affect royalties other than possibly increasing prices in a more competitive environment. The ethane will be bought by Shell before it reaches the plant so their processing costs will not be a factor.

Permalink Reply by M.A.B. on February 1, 2018 at 5:13am

Thanks for your reply Jim

I thought I remember seeing a corridor of wet gas in NW PA?

Permalink Reply by Jim Litwinowicz on February 1, 2018 at 6:41am

Hilcorp is getting wet gas out of W Lawrence and W Mercer Counties.  Its a private company so there is little public info on their actual production. Others, like Halcon, have pulled out of Mercer.

Rex is drilling Upper Devonian in Butler Co and getting good results. Seems a couple of advantages of UD is that those wells are cheaper to drill as UD is shallower and they seem to deplete slower. Don't know how far that UD wet gas will be found. Perhaps some of SE Lawrence Co.

I will assume much of that ethane will go to the Shell plant. Don't know of much other wet gas in NW Pa.

Permalink Reply by Donald on February 2, 2018 at 4:09am

The Wet gas extens to southern Oh. Meigs Co. but their has been no leasing in that area that I am aware of.

could this mean leasing in those areas?

Permalink Reply by Jon on February 2, 2018 at 9:03am

There's wet gas in Butler County PA as well. What is the estimated completion date of the plant?

Permalink Reply by M.A.B. on February 2, 2018 at 11:50am

I believe 2022

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