A new report fedeal report finds developing ethane storage in Appalachia could provide a boost for the entire petrochemical industry.
The report, asked for by members of Congress and released Tuesday by the U.S. Department of Energy, examined the feasibility of developing underground storage and distribution infrastructure for ethane, a natural gas liquid brought up during shale drilling and a key feedstock for most plastics.
The findings were praised by Energy Secretary Rick Perry, who added that the Trump administration also supports ethane storage in the region.
“There is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,” he said, in a press release. “As our report shows, there is sufficient global need, and enough regional resources, to help the U.S. gain a significant share of the global petrochemical market. The Trump Administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic production diversity.”
The Marcellus and Utica shale formations, located under West Virginia, Ohio and Pennsylvania, are ethane-rich, and the agency estimates the largest growth in natural gas liquids production is expected from this region.
"Ethane production in Appalachia is projected to continue its rapid growth in the coming years, reaching 640,000 barrels per day in 2025 – more than 20 times greater than regional ethane production in 2013," the report states.
Developing a natural gas liquid storage "hub" is critical to growing the plastics and chemicals industries.
Some storage capacity is under development in the region.
Energy Storage Ventures LLC is developing the Mountaineer NGL Storage project. When completed, the project would store 2 million barrels of ethane, butane and propane in four underground salt caverns on a 200-acre site, about a mile north of Clarington, Ohio, on the Ohio River.
Another high-profile public-private natural gas liquid storage project is also in the works. The Appalachia Storage and Trading Hub cleared its first major hurdle earlier this year when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan.
Republican Sen. Shelly Moore Capito of West Virignia priased the report's findings in a tweet.
DOE said building underground storage and distribution in Appalachia could benefit the entire industry and offer a "competitive advantage," in part because it would diversify where ethane is stored geographically.
Currently, the bulk of America’s petrochemical industry and 95 percent of ethane storage is located near the Gulf Coast, which makes it vulnerable to climate change and extreme weather events.
The report focused largely on the economic benefits of ethane storage and did not examine the environmental costs, or factor in how increased flooding across Appalachia due to climate change might affect ethane storage or a petrochemical system.
Environmental groups say ethane storage and any petrochemical industry buildout in the region jeopardizes the region's air and water quality and would negatively impact public health.