PITTSBURGH - Caiman Energy Chief Executive Officer Jack Lafield said more gas processing plants and pipelines are on the way to the Ohio Valley.
During last month's Developing Unconventional Gas East Conference and Exhibition in Pittsburgh, Lafield said more gas processing plants will be built in the local area to handle the material coming out of the ground. Caiman runs the Fort Beeler processing plant near Cameron on U.S. 250.
MarkWest Liberty operates a processing facility in Majorsville, while Dominion Resources is building a plant along the Ohio River near PPG Industries.
"More plants like this are needed," Lafield said, noting more pipelines for gas transportation are also needed.
A processing plant should not be confused with an ethane cracker, such as the one for which Shell Chemicals plans to announce the location in January. Natural gas that is pumped out of the ground travels to the processing plant so the methane can be separated from ethane, butane, propane, pentane and other substances. An ethane cracker would further process the ethane to make ethylene for plastic production.
Regarding Shell's cracker project, Dan Carlson, general manager of new business development for Shell, said the growth of the overall gas industry and ethane production in the Ohio, West Virginia, Pennsylvania region is notable.
"Two or three years ago, I couldn't imagine sitting here talking about building a new cracker here," he said.
Caiman recently signed a deal to transport ethane from the local area to Canada, while Chesapeake Energy agreed to send some to the Gulf Coast for cracking. Shell's plan of using 60,000-80,000 barrels of ethane daily would still allow Ohio or West Virginia to gain such a facility though, according to production estimates.
Wherever Shell builds its cracker, some of the ethane is expected to come for the wet gas regions of Ohio's Utica Shale. Larry Wickstrom, Ohio state geologist, said the "large wet gas region" of eastern Ohio, including Belmont, Jefferson, Monroe and Harrison counties, can produce plenty of oil and natural gas.
"We are friendly to drilling in the state," he said. "We have very fair laws."
Wickstrom said Ohio is now home to 180 injection wells for the disposal of briny wastewater, much of which comes from fracking in West Virginia and Pennsylvania. Two of these wells are located in Belmont County, with another one in Jefferson County.
"We don't think West Virginia and Pennsylvania have the right attitude about this yet," he said of shipping wastewater to Ohio for injection. "Sending their wastewater to us is not a good long-term solution."
The company with the most active operations in Ohio is EnerVest Ltd., which has some joint ventures going with Chesapeake. EnerVest now operates 8,713 wells in Ohio over 764,000 acres, according to President and Chief Executive Officer John Walker. Several of these wells lie in Carroll, Guernsey and Harrison counties.
Walker said he was "very encouraged" by the company's results from Ohio's oil and gas pockets, but he said successful drilling remains a work in progress.
"All wells are science projects. We are learning on all of this," he said. "As the largest operator in Ohio, if we make a mistake, we expect to be fined heavily."
Michael Bodino, head of energy research for Global Hunter Securities, said it is notable to see companies like Chevron, Exxon Mobil and Hess Corp. moving into Ohio.
"This is a credit to the people of Ohio in how they have handled their leases," he said.