Merging MarkWest Energy Partners and Marathon Pipeline Partners are looking at building an alkylate plant near Jewett in Ohio's Harrison County.
The plant would take butane from the Utica and Marcellus shales and turn into alkylate to boost octane in gasoline-powered vehicles.
A decision will likely be made in the next 12 months, company officials said on Wednesday at a conference in Pittsburgh.
Now that their marriage is complete, MarkWest Energy Partners and Marathon Pipeline Partners are getting to the business of combining their interests.
Colorado-based MarkWest has a lot of butane to sell. The company said it markets about 75 percent of natural gas liquids produced in the Marcellus and Utica region and butane is one component of that.
Marathon Petroleum Corp, the parent company of the pipeline firm that acquired MarkWest for $15.6 billion last year, is betting on government regulations requiring gasoline to have higher octane ratings. Butane can be refined into alkylate, an octane booster.
The companies saw this coming when they announced the merger last year. Marathon CEO Gary Heminger told analysts last July that the dynamic makes MarkWest that much more attractive and opens up the possibility of a standalone alkylate plant in Appalachia.
Currently, the product is produced in oil refineries, not in the gas fields, along with a host of other products.
“I think it makes sense to manufacture it within the region” Mr. Heminger said in July.
On Tuesday, MarkWest and Marathon said they’re waiting for a decision on the project within the next 12 months. They’re considering siting the facility somewhere in the tri-state area, if not next to MarkWest’s Hopedale natural gas processing plant in Jewett, Ohio, then near it, said Scott Garner, vice president of corporate development and joint venture management at MarkWest.
“We’re talking to producer customers about it,” he said at Hart’s Marcellus-Utica Midstream conference at the David L. Lawrence Convention Center, Downtown. “The technology has been identified. It appears feasible.”
Butane, like all natural gas liquids whose production has soared along with oil and gas, have seen prices fall as demand struggles to catch up to supply.
On Tuesday, normal butane traded at 49.5 cents per gallon, down from $2.21 five years ago.
Marathon Pipeline’s director of investor relations, Lisa Wilson, said that Marathon Petroleum would likely buy part of the alkylate produced at such a plant, but the idea is to sell to other refiners as well.
“It serves a broader need,” she said.
Has anyone seen a royalty for the Butane component of their NGLs?
Has anyone seen a royalty for NGLs?
Ohio and the rest of the Appalachian Basin landowners have been protected so well from those hazardous NGLs that we have failed to ensure a royalty payment.
All of the major domestic producers are in the wet gas region for NGLs, but none of them are paying a royalty for what they are taking.
This is will go down in history as the largest theft ever pulled off while everyone was watching.
Sounds like one of those tricks magicians play on TV, like hide the Statue Of Liberty, or the Brooklyn Bridge.
John Kasich, all Ohioans will be needing a hug when they find out what has happened on your watch.
A recent article in the Harrison County News Herald newspaper (within the past month) appears to indicate that this project in Jewett is presently looking less likely to be built. Of course, it may be more of a delay than an actual cancellation.
Awesome! We definitely need to turn more of the gas that we're producing into refined products here. Keeps more of the revenue in the area. I'd really like to see this kind of thing go in on the West Virginia side of the river, but close is better than nothing.
I am so glad i don't have a lease, learning all this new stuff, just makes it all the more fun when they come around and try and tell me how bad it is an that i should just sell. I would just like to thank Chesapeake for releasing me before their law suit.We are free and clear to lease or sell to the highest bidder let the games begin.