Propane production to rise in Marcellus, Utica shale plays

March 24, 2017 By    

Propane production is expected to increase in the Marcellus and Utica shale plays through at least 2030, according to an IHS Markit report titled “Prospects to Enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing.”

IHS Markit also expects that propane production in the Marcellus and Utica shale plays will feature lower prices than propane production from the U.S. Gulf Coast. Although IHS Markit predicts ethane will primarily be used as a petrochemical feedstock with opportunities for additional steam crackers in the footprint of the Marcellus and Utica shale plays, propane has multiple competing end uses that may result in natural gas liquids (NGL) being used for other purposes. IHS Markit predicts propane will continue to be used primarily in residential, commercial, industrial and utility sectors as a fuel because of strong demand in both domestic and international markets.

IHS Markit also reviewed the competitiveness of the two types of propane petrochemical processing as second- and third-tier opportunities. IHS Markit identifies a stronger potential for propane used as a petrochemical feedstock for propane dehydrogenation rather than for steam cracking. This is because petrochemical steam crackers have a less expensive feedstock (ethane) readily available, the analysis concludes.

In addition, the abundance of natural gas from the Marcellus and Utica shale plays has resulted in economic benefits for Pennsylvania over the past decade, even during periods when natural gas prices have been low, IHS Markit says. Moreover, up to 40 percent of the natural gas produced in the Marcellus and Utica shale plays is rich in NGL – more than 70 percent of which is ethane and propane. This NGL-rich production source is a significant factor that continues to drive natural gas development in Pennsylvania, the report notes.

IHS Markit predicts continued upward production trends for both natural gas and NGL through at least 2030, with the Marcellus and Utica shale plays acting as key contributors to the ongoing growth. Between 2026 and 2030, NGL production to meet U.S. demand is expected to reach nearly 6.3 million barrels per day (bpd), of which more than 1 million bpd of NGL is expected to be produced in the Marcellus and Utica shale plays. The high value of the NGL contained in the natural gas stream – specifically ethane and propane – is responsible for ongoing production increases, IHS Markit reports.

Team Pennsylvania Foundation commissioned IHS Markit to develop the report in order to identify and evaluate opportunities for petrochemical and plastics manufacturing in Pennsylvania based on the natural gas resources available in the Marcellus and Utica shale plays. The full report is available online.

Megan Smalley

About the Author:

Megan Smalley is the associate editor of LP Gas magazine. Contact her at msmalley@northcoastmedia.net or 216-363-7930.

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