MOUNDSVILLE - Calling a project that would send up to 200,000 barrels of Marcellus and Utica shale natural gas liquids - including ethane - to the Gulf Coast daily "ahead of its time," officials with Williams Energy Monday pulled support from the Bluegrass Pipeline.
In a company statement, Williams officials said they could not secure a sufficient level of customer commitments to justify building the pipeline at this time, though they continue exploring options for ethane, propane, butane and other NGLs.
Tulsa, Okla.-based Williams gathers and processes natural gas for multiple drillers at the Fort Beeler plant along U.S. Route 250 and at the fractionator south of Moundsville. The company plans to commission the Oak Grove facility in May.
Originally projected to be in service by late 2015, the Bluegrass Pipeline was a joint venture between Boardwalk Pipeline Partners and Williams. Bill Lawson, director of corporate development for Williams, and Michael McMahon, senior vice president and general counsel for Boardwalk, released a joint statement regarding the Bluegrass.
"While data show there will soon be a need for a large-scale solution like Bluegrass Pipeline to meet market needs, potential customers to-date have so far chosen to focus on local solu#tions," they stated. "As a result, we continue to pursue support for the project, but we are exercising capital discipline and not investing additional capital at this time. In short, Bluegrass Pipeline appears to be a project that's ahead of its time."
According to the U.S. Energy Information Administration, by 2016, production of NGLs from the Marcellus and Utica shale areas is expected to reach at least 650,000 barrels per day. Lawson and McMahon said this would mark an all-time high for liquids production in the U.S.
"The need to move NGLs from the liquids-rich natural gas production in the Utica and Marcellus shale plays to markets is very real and an important component of enabling the manufacturing renaissance in America," they added.
Because there is no ethane cracker in the Utica and Marcellus regions, some companies already are shipping the product for cracking at facilities in Canada or along the Gulf Coast. Others simply burn it off via flaring, while others are able to mix it into the commercial natural gas stream.
As for propane and butane, Williams now transports these products to market from its fractionator facility by truck or train, as does Blue Racer Midstream from its Natrium plant.