News

Pipeline Outage Halts US Ethane Shipments

16.04.2018 -

Mariner East 1, the main artery for shipping shale gas-derived ethane to the Marcus Hook terminal in Pennsylvania for transport to Europe – and potentially to points beyond –may not reopen in the near future, latest reports suggest.

The 300-mile pipeline closed temporarily on Mar. 7 after three large sinkholes were discovered near the drilling site for an adjacent pipeline, Mariner East 2. The shutdown was later extended.

Permitting the continued flow of hazardous liquids without proper steps to ensure the integrity of the pipeline “could have catastrophic results impacting the public,” the state said.

An investigation by the Pennsylvania Public Utility Commission (PUC).determined that the sinkholes were caused by subsidence along that pipeline’s path and were endangering nearby homes. It noted that horizontal directional drilling may have been a factor.

The risks outweigh the financial risks for the company, PUC said, adding that its emergency order to halt construction of the second pipeline was in reaction to a “clear and present danger to life or property.” Reinstatement of service will require formal action by the commission.

Liquid natural gas shipments to Europe, in particular to Ineos at Rafnes, Norway, and Grangemouth, Scotland, are routed through the Marcus Hook terminal near Philadelphia. This, too, remains idle while pipeline operator Sunoco, a spin-off of Energy Transfer Partners, conducts state-mandated safety tests.

According to US press reports, the repairs could take at least until the end of May. Meanwhile, market watchers said exports of ethane and propane were backing up at Marcus Hook, as outlets for shipment from the US Gulf coast are limited.

Alongside the technical problems besetting its construction, Mariner 2 is the subject of protests from US environmental groups and local residents, who have called for an end to its construction. Opponents contend the pipeline it is dangerous as it is routed through densely populated neighborhoods.

Sunoco recently prevailed in a lawsuit brought by residents asking the state to enforce local zoning laws barring pipelines near schools and residences. The court ruled, however, that landowners could not sue because the state had awarded the pipeline operator the status of a public utility.

A new challenge, namely that Sunoco should not have carried out directional drilling along an established limestone fault line, is said to be in progress. According to environmental advocacy group Food and Water Watch, construction of the second pipeline has caused “a series of disasters” across Pennsylvania, including spills and contamination.

Mariner East 1 has nameplate capacity to transport 70,000 bbl/d of LNG. When initiating its first shipment in 2016, Ineos heralded the start of what it called a “virtual pipeline” that would see eight dragon ships continuously plying the transatlantic route from the US to Norway and Scotland.

The Swiss-based group’s chairman, Jim Ratcliffe, at the time called the ethane shipments to Grangemouth, a “game changer” for British manufacturing. Parallel to this, Ineos has been pursuing a second route to shale gas-derived ethane, buying up licenses for shale exploration in the UK.

The chemical producer’s efforts to tap mooted British shale reserves have been thwarted by Scotland’s now permanent moratorium on shale exploration across the country – which Ineos is challenging in court – as well as local opposition to exploration in England.

Commenting on the Mariner outage, Ineos told US journalists it was unaffected by the pipeline’s closure as it can also draw on a terminal at Morgan’s Point on the US Gulf, near Houston, Texas. Friends of the Earth Scotland warned nevertheless that the US pipeline closure would increase opposition to fracking on both sides of the Atlantic.

If horizontal drilling is officially declared the cause of the sinkholes, this might not augur well for Ineos’ efforts to overcome UK opposition, fracking opponents say. In the event that its legal efforts to drill in the National Trust’s Clumber Park in Nottinghamshire fail, the group has suggested it could drill horizontally from outside the park.