Two major pipeline announcements were made last week that will help relieve the proposed bottleneck of natural gas liquids (NGLs) being produced in Ohio, West Virginia, and western Pennsylvania. The Appalachia-to-Texas Express (ATEX) Pipeline and the Bluegrass Pipeline are both currently being constructed to transport the growing NGL output to rapidly expanding marketplaces and chemical manufacturers who use these liquids as feedstock.

Pipeline infrastructure has been a hot topic in Ohio since Utica Shale development has turned up a plethora of NGLs.  This commodity brings with it many benefits for operators and landowners, since it sells at a premium compared to natural gas. But delivering this value to consumers and Ohio businesses has suffered from a bottleneck, owing to a limited pipeline infrastructure.

Currently, Ohio has seven natural gas processing plants costing over $7.2 million in different stages of operation and construction.  The MarkWest Plant in Cadiz is already processing 185 Mmcf/d, with more capacity to be online later this year, while the M3 plant’s first phase is scheduled to come online this summer.  Even with those plants processing NGLs, operators are still forecasting a bottleneck in transmission that threatens to further slow down development.

It has been estimated that the western Marcellus and Utica has the potential to produce 500,000 barrels of NGLs a day by 2018.  To put that in perspective, Dominion’s Natrium Plant in West Virginia is only able to process 200 Mmcf/d and fractionate 36,000 barrels of NGLs per day. This is only seven percent of the region’s potential by 2018.

That sounds a bit technical, but it basically boils down to this: If the infrastructure is not in place to handle this added capacity of natural gas liquids, operators will be forced to slow down development – costing Ohio billions of dollars in investment and putting at risk thousands of jobs for our residents.

Luckily, the Bluegrass and ATEX pipelines are being constructed to help relieve these stresses.

“The current infrastructure challenge with natural gas liquids in the Northeast is slowing drilling and isolating liquids supplies from the robust markets in the Gulf that are poised to grow substantially over the next five years.”– Alan Armstrong, President and Chief Executive Officer of Williams

The Bluegrass pipeline is a Williams and Boardwalk Pipeline Partners joint venture that will deliver NGLs from Pennsylvania, West Virginia and Ohio to Louisiana and Texas in order to be processed and used in the petrochemical industries in the Gulf region.  The pipeline will begin in Mercer County, Pa., and Marshall County, W.V., making its way west across Ohio before heading south to Hardinsburg, Kentucky.  From Hardinsburg, the pipeline will use 623 miles of already existing pipeline that will be repurposed to get the NGLs to Eunice, Louisiana for processing and sales.

When complete, the Bluegrass pipeline will be able to provide producers with 200,000 barrels per day of mixed NGLs take-away capacity and could be increased to 400,000 barrels a day depending on the market demand.  The Bluegrass pipeline is scheduled to be completed in late 2015.

The ATEX pipeline, meanwhile, will solely transport ethane instead of mixed NGLs.  The ethane will be processed at one of the MarkWest facilities in the region or the M3 project in Columbiana and Harrison counties. The 1,230-mile pipeline will transport the ethane to Texas to be used as a feedstock for the plastics industry.

The ATEX project is expected to create over 4,000 construction and full-time jobs throughout the region.  The project will begin in Washington County, Pa., and continue west across Ohio to Seymour, Ind., resulting in the construction of 369 miles of new pipeline.  Similar to the Bluegrass project, the ATEX will utilize existing pipelines to take the product the rest of the way to Texas.  With only 30 percent of the project needing to be constructed, the ATEX pipeline is scheduled to be operational during the first quarter of 2014.

Given the limited petrochemical needs of the northeast United States in the near future, both of these pipelines will serve as a way to maximize the NGL potential of the Utica and Marcellus.  As these projects come online, producers will continue to increase development to meet the increasing needs of the Gulf region.

Unlike a tale of two cities, there are no worst of times to be had; this tale of two pipelines provides nothing but positive outcomes for Ohio.