A primer on Tennessee Gas Pipeline No. 1 and ‘NGLs’

Published 1:41 pm Thursday, December 21, 2017


Guest columnist

With plans continuing to move forward for the repurposing of a natural gas pipeline that runs through Boyle County, it’s likely the pipeline and its proposed product — natural gas liquids (NGLs) — will be making headlines frequently in 2018.

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With that in mind, here are some answers to questions many might have about the pipeline and NGLs.

What is the pipeline?

The pipeline in question is Tennessee Gas Pipeline No. 1, a now-abandoned, 72-year-old, 964-mile-long pipeline that pipeline extends from Tuscarawas County, Ohio, to Natchitoches, Louisiana.

Energy company Kinder Morgan intends to construct approximately 200 miles of new natural gas liquids (NGLs) pipeline from Natchitoches to Mont Belvieu, Texas, in order to provide NGLs for fractionation facilities within easy reach of Gulf ports that can service worldwide markets.

The pipeline passes through 18 counties in Kentucky; 20.3 miles of the pipeline are located in Boyle County.

The repurposed pipeline would be used to transport mixed NGLs — sometimes referred to as “Y-grade” or “raw NGL mix” — to one or more centralized facilities for further processing called fractionation.   

What are NGLs?

NGLs are a byproduct of cleaning raw natural gas by separating impurities and various non-methane hydrocarbons and fluids to produce pipeline-quality dry natural gas (Methane).  NGLs are what is left after the natural gas processing is completed.  NGLs are removed from the well gas by cooling the temperature of the processed gases in a process known as cryogenic expansion.

Cryogenic expansion processes consist of lowering the temperature of the gas stream to around -120 degrees Fahrenheit. This causes the natural gas temperature to drop, thus condensing the various hydrocarbons into liquids. Methane will remain in its gaseous form.

NGLs are heavy hydrocarbons including ethane, propane, butane, iso-butane and natural gasoline.

How are the different materials in NGLs separated from each other?

Once NGLs have been removed from the natural gas stream, they must be separated into their individual products to be useful. This is accomplished through fractionation. Fractionation works based on the temperature at which each compound becomes a gas and can be separated from the remaining liquid. The entire fractionation process is a series extractions, usually in the following order:

• Deethanizer — ethane removal

• Depropanizer — propane removal

• Debutanizer — butanes (normal and iso-) removal, leaving the pentanes and heavier hydrocarbons in the NGL stream.

• Butane splitter or deisobutanizer — this step separates the different butanes.

What’s the difference between NGLs and liquid natural gas?

NGLs are often confused with liquefied natural gas (LNG). LNG is what it the name implies — natural gas in a liquid state. To move natural gas across oceans, it must be converted into LNG, a process called liquefaction.

LNG is natural gas that has been cooled to –260 degrees Fahrenheit, changing it from a gas into a liquid that is 1/600th of its original volume.

LNG cannot be economically transported long distances in a pipeline, because of its extreme temperature and high pressure. Such pipelines exist, but are short in length and extremely expensive.

Is an NGL pipeline necessary? Do other options exist?

As more and more natural gas is extracted from the Marcellus and Utica shale in the northeast United States, producers have more and more NGLs. Natural gas prices fluctuate, and operators need to sell the byproducts to make drilling work financially. Pipelines are required to transport the NGLs to a fractionation facility.

Fractionation facilities are generally placed near the markets they serve, because the component gases are highly flammable. Transporting the resultant gases is expensive because special trucks, ships and storage tanks are required to mitigate the explosive risks.  

Pipelines offer an attractive option to NGL producers, because the distance traveled is much shorter than what’s required for transport by rail or truck. It also involves less exposure to conflicting traffic and the resultant risk of accidents that is inherent with both rail and road transport.

Also, the 24-inch diameter of the pipeline has a capacity of 400,000 barrels per day — much greater than is practical to transport by either rail or truck transport. The choice of the Louisiana and Texas endpoints is strategic, because it allows NGL products to be shipped to worldwide markets by ocean-going tanker ships.  

The disadvantage of pipelines is the high level of risk in the event of a pipeline failure. The risks include explosion, incineration, asphyxiation, ground and drinking water contamination and exposure to known carcinogens.

An alternative option is to process the NGL into its component compounds at a cracking facility within the Utica Marcellus area. A study of the Appalachian region that emerged in late summer identified the opportunity for NGL storage and encouraged the local industry to pursue it.

There is a growing regional interest in developing a petrochemicals industrial base. The University of West Virginia’s Appalachian Oil/Natural Gas Research Consortium has identified and mapped potential options for subsurface NGL storage. They have named 50 counties of interest along the Ohio River, stretching from southwest Pennsylvania to the southern end of West Virginia. Storage can manage differences between NGL supply and market demand for the derived products of NGLs.  

The derived products can be shipped to U.S. markets by truck and rail with considerably fewer threats to people and property. An approximate yield of the components of NGL fractionalization is ethane, 42 percent; propane, 28 percent; normal butane, 8 percent; iso-butane, 9 percent; and natural gasoline, 13 percent.

If the NGL pipeline project happens, can Boyle County keep its people and property safe?

In 2016, local governments in Boyle County passed a zoning amendment that requires applicants wishing to move certain hazardous materials through pipelines in the county to first obtain a conditional use permit from the local Board of Adjustments. The amendment was made with support of many in the county who were opposed to the pipeline plan because they said it creates the risk of a catastrophe if the pipeline ruptures and fracking byproducts — NGLs — spill into Herrington Lake.

The amendment requires applicants to prove their project (e.g., the repurposed pipeline) fits in well with how the surrounding land is already being used. The Board of Adjustments also can mandate that the applicant provide funds for independent experts to verify any and all claims that adequate safety measures are in place and that all necessary emergency response teams are in place before operations begin.

What products are made from NGLs?

Ethane’s applications include plastics production and petrochemical feedstock. End-use products include plastics, antifreeze and detergent.

Applications for propane include residential and commercial heating, cooking fuel and petrochemical feedstock.

Butanes are used in petrochemical feedstock or blended with gasoline and propane. Products include synthetic rubber for tires and lighter fuel.

Iso-butanes are used in refinery feedstock and petrochemical feedstock.

Pentanes are used in natural gasoline and as a blowing agent for polystyrene foam.

Pentanes plus, a special category also known as natural gasoline, is blended with vehicle fuel and exported for bitumen production in oil sands.

How big Is the worldwide NGL market?

Even a casual reader of the North American oil and natural gas industry publications would be well aware of the important role a large swatch of Pennsylvania, West Virginia and eastern Ohio — sometimes referred to as Utica Marcellus — plays in the energy future of North America and the entire world.

That awareness has sparked repeated reports in the trade press of industry players and observers urging fast and steady approval for new infrastructure to process and transport the growing treasure trove of natural gas and NGL. Prospects have created the nation’s largest gas producer and potentially the world’s largest-ever natural gas basin.

By late 2017, it is not clear how much progress on this buildout of historic proportions is being made, despite production projections that are describing a world gas resource that could be double Saudi Arabia’s by the mid-2020s.

To say the stakes are high for the industry, the federal government, the nation’s future economy and world-leading energy standing is a gross understatement.

From 2017 to 2035, PIRA (a leading energy market analysis firm) forecasts that the NGL worldwide market will expand by 50 percent.

Today, the U.S. produces nearly 3,000 million barrels of NGLs per day. That production is as large as the next four producer nations (Saudi Arabia, Canada, Qatar and United Arab Emirates in that order) combined. That production capacity will only grow as the shale revolution matures.

The U.S. is the leading exporter of ethane in the global market. Propane is gaining prominence as a green fuel across residential, commercial, industrial, transportation, and chemical sectors.  

What industry changes are expected?

The PIRA experts expect the next 20 years will witness radical shifts in the supply, demand and trade balances for NGLs. These shifts will have profound impacts, reaching beyond LNG and ethane markets and trade. They will affect upstream oil and gas economics, as well as downstream pricing for naphtha and other oil products; in turn impacting petrochemical feed choices and investments, refining margins and runs, and even crude oil production.

This trend is incentivizing investment in fractionation, local petrochemical facilities, and export Infrastructure. The battle to capture global markets will generate both winners and losers everywhere — exporters in North America and the Middle East, as well as importers in Europe, Asia and Latin America.

Trade will change dramatically as rapid increases in North American exports force their way into the market. Although initially focused on Europe and Latin America, destinations will shift more towards Asia because of the 2016 widening of the Panama Canal.