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Unconventional Yearbook 2018

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Page 92 of 107 | January 2018 | 91 MIDSTREAM | 2018 UNCONVENTIONAL YEARBOOK In early November 2017 those differentials were running about $7/bbl, and Stratas forecasts that any differential will remain no larger than the high single digits. That is in contrast to 2013 when the differential soared to four times the November rate, close to $30/bbl. "Overall crude production has outpaced pipeline construction," Haas said. "Even Niobrara and Uinta production is pushing into Cushing with insuffi cient capacity out." Two other projects are underway to help alle- viate the bottleneck and the differential. Interest- ingly, they are designed to move crude north to domestic refi ning markets, rather than to tidewater for export. MPLX's Ozark line expansion will move 115 Mbbl/d from Cushing to St. Louis; the Dia- mond Pipeline will take 200 Mbbl/d from Cushing to Memphis. MPLX acquired the Ozark line in February 2017 from Enbridge for $220 million. It runs from Cush- ing to Wood River, Ill., on the Mississippi River where Phillips 66 has a refi nery. The expansion is due to be completed by the middle of 2018 and will take the line's capacity from 230 Mbbl/d to about 350 Mbbl/d. Plains All American planned to start operations on its Diamond crude line at the end of 2017. In its November 2017 earnings call Plains reported that construction on Diamond had been completed at the end of October, and that commissioning had begun. Commercial operations were to begin during December, with the normal ramp up to capacity through the early part of 2018. There are two other crude lines that reckon into the situation. MPLX has announced an open season to judge shipper interest in reversing the Capline, and the Dakota Access Pipeline that feeds into the Energy Transfer Crude Oil pipeline to Texas. All are likely to turn Patoka into an important hub, "like a Cushing North for the nation's inland crudes," said Haas. Back in Texas, Plains All-American's Permian Express will take 140 Mbbl/d from the Permian region to tidewater rather than into Cushing. In July 2017 Oneok revealed plans to double its Canadian Valley gas processing plant in the Stack to 400 MMcf/d "to support increasing produc- tion growth" in the region. The Canadian Valley II project is to be completed by the end of 2018 Surfeit of Ethane Revives Appalachian Chemical Industry E arly in November 2017 Shell Chemical began construction on a $6 billion olefi ns complex in Potter Township, Pa., northwest of Pittsburgh. The steam cracker at the heart of the plant will use the overabundant Marcellus and Utica ethane and natural gas for feedstock and fuel to make primarily ethylene. That monomer in turn will be used to make polymers for regional manufacturing as well as export. The Shell complex includes the cracker and three polyethylene trains, as well as a 250-MW gas-fi red power plant to provide electricity and steam to the cracker. Total capacity of the polymer units is projected at 1.6 MMmt/year. Shell has noted that almost three- quarters of the North American manufacturing industry that uses polyethylene is less than a thousand miles from Pittsburgh. Construction is expected to take at least three years. Steel in the ground is the culmination of years of planning that came after decades of speculation. While Shell is fi rst off the mark, it is not likely to be the only game in town. As long as there has been talk of a Marcellus cracker there has been the realization there have to be at least two. Operationally polymer plants tend to be steady-on types of units, while steam crackers, not unlike catalytic cracking units in a refi nery, are more temperamental. For a polymer operation to be a reliable supplier, it has to have an alternate source of feedstock if its primary cracker goes down. The Houston area has multiple olefi ns plants, as well as cavern storage of ethylene. Neither exists in Pennsylvania. As a global polymer producer Shell would easily be able to divert polymer shipments to replace an outage at Potter Township. Still chemical industry sources say it would be best if there were at least one other cracker. Jim Justice, governor of West Virginia, has been a booster for several proposals for olefi ns plants in that state, just over the border from the Shell project. Brazilian company Braskem, and its subsidiary Odebrecht, revealed plans for a cracker at Wood River, W.Va., about three years ago. Recently, Braskem took over the project entirely, but no investment commitment has been made. There are other ideas for a West Virginia cracker, as well as at least one plan for an olefi ns unit in Ohio. ■ —Gregory Morris

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