How a molecule changed the Gulf Coast — and the world

Ethane flow­ing from shale fields is trig­ger­ing a petro­chem­i­cal boom that’s re­shap­ing mar­kets

Houston Chronicle Sunday - - FRONT PAGE - By Jor­dan Blum STAFF WRITER

SAN AU­GUS­TINE — Work­ing in nearly 100-de­gree heat, sweat­ing through mud-stained cov­er­alls, four roustabouts wres­tled with 30foot sec­tions of pipe that would fol­low a drill bit plung­ing some 13,000 feet into the earth, then turn­ing nearly 90 de­grees to chew through another 10,000 feet.

Over the next few weeks, the well would be drilled, fracked and com­pleted, free­ing mol­e­cules of hy­dro­gen and car­bon that would rush through fis­sures in the dense shale rock and flow through the well as nat­u­ral gas. But ac­com­pa­ny­ing the nat­u­ral gas par­ti­cles was another, more com­plex molecule, con­tain­ing two atoms of car­bon each at­tached to three atoms of hy­dro­gen.

That molecule, de­scribed chem­i­cally as C2H6, is trans­form­ing the Gulf Coast econ­omy and re­shap­ing global mar­kets, from Eu-

rope to the Mid­dle East and Asia. Known as ethane, the molecule is the cat­a­lyst for the petro­chem­i­cal boom that has at­tracted tens of bil­lions of dol­lars of in­vest­ment, cre­ated tens of thou­sands of con­struc­tion and man­u­fac­tur­ing jobs, ex­panded ex­ports, and fed the grow­ing de­mand for con­sumer goods in China, In­dia and other de­vel­op­ing na­tions.

The im­pact of ethane is per­haps the most re­mark­able de­vel­op­ment in the re­mark­able story of the shale revo­lu­tion. Less than three years ago, ethane was a largely un­wanted byprod­uct of oil and gas drilling, much of it burned away in the nat­u­ral gas stream flow­ing to power plants, busi­nesses and homes, or flared off at well sites.

But to­day, ethane is feed­stock for nearly half of U.S. plas­tics pro­duc­tion and a valu­able ex­port to chem­i­cal com­pa­nies around the world. As ethane flows from Texas shale fields, chem­i­cal and en­ergy com­pa­nies are build­ing and ex­pand­ing plants to take ad­van­tage of the cheap, plen­ti­ful raw ma­te­rial, plow­ing more than $140 bil­lion into the Gulf Coast alone.

“It’s ab­so­lutely ex­tra­or­di­nary this is hap­pen­ing in the United States,” said Neil Chap­man, Exxon Mo­bil se­nior vice pres­i­dent. “I can as­sure you no­body pre­dicted this in 2000 or even 2005.”

U.S. ethane pro­duc­tion is pro­jected to reach 2 mil­lion bar­rels a day by 2020, dou­ble the out­put at the height of the last drilling boom in 2014. On the jour­ney from well­head to mar­ket, ethane mol­e­cules will change forms sev­eral times as they are sep­a­rated from nat­u­ral gas, heated to be­come eth­yl­ene, pro­cessed into poly­eth­yl­ene, and ul­ti­mately ex­truded and molded into pack­ag­ing and prod­ucts that will ap­pear on shelves in stores from Hous­ton to Mum­bai.

But it all starts here, at a nat­u­ral gas well in East Texas.

Danc­ing with pipe

The Hay­nesville shale stretches across 9,000 square miles, strad­dling much of the Texas and Louisiana bor­der. XTO En­ergy, a sub­sidiary of Exxon Mo­bil, be­gan drilling the shale here a decade ago.

This par­tic­u­lar drilling site is nick­named Ea­gles — XTO names its sites af­ter col­lege mas­cots — and the well called Ea­gles DU #H1, the DU for drilling unit and the H for Hay­nesville. On a blis­ter­ing July day, the 170-foot-tall rig had al­ready made the turn from ver­ti­cal to hor­i­zon­tal drilling, a grad­ual process that en­tails shift­ing at 10-de­gree an­gles ev­ery 100 feet un­til the bit trav­els side­ways.

Oil field work­ers ran more pipe into the well, ma­nip­u­lat­ing the rig’s 10,000pound, hy­drauli­cally-pow­ered tongs, called an iron rough­neck, to screw the pipe sec­tions to­gether and drive them into the well. About 100 pieces of 30-foot steel pip­ing laid next to the rig, each lifted by ca­bles and guided by work­ers un­til it was ver­ti­cal, await­ing the grasp of the iron rough­neck.

“It’s kind of like a dance,” said Rick Can­non, an XTO vice pres­i­dent of pro­duc­tion op­er­a­tions. “The pipe is pretty flex­i­ble, but you have to go slow.”

The Hay­nesville re­gion was among the first shale for­ma­tions ex­ploited by the drilling and frack­ing tech­niques that spurred the shale revo­lu­tion. A decade ago, pi­o­neer­ing com­pa­nies such as Ch­e­sa­peake En­ergy of Ok­la­homa City and Petro­hawk En­ergy of Hous­ton be­gan drilling the shale play to un­lock nat­u­ral gas re­serves long thought to be in­ac­ces­si­ble. XTO wasn’t far be­hind.

The U.S. Ge­o­log­i­cal Sur­vey es­ti­mates the Hay­nesville holds about 175 tril­lion cu­bic feet of re­cov­er­able nat­u­ral gas, the na­tion’s sec­ond-largest gas re­serve af­ter the Ap­palachia re­gion, which in­cludes the Mar­cel­lus and Utica plays. Hay­nesville pro­duc­tion hit a record 10.4 bil­lion cu­bic feet of gas a day in 2011, fell to 6 bil­lion cu­bic feet day in 2016 as nat­u­ral gas prices plunged, but has since re­bounded to 8.5 bil­lion cu­bic feet a day.

As tem­per­a­tures rose above 95 de­grees, the men kept feed­ing the pipe to the rig, la­bor­ing through re­lent­less heat and hu­mid­ity. The work would go on 24 hours a day, in 12 hour shifts, in­ter­rupted only by me­chan­i­cal fail­ures and light­ning, which can strike the tall, metal rigs.

Over the 40 days it took to drill the well, any­where from six to 20 peo­ple worked at the site at any given time. Drillers and direc­tional drillers pi­loted the process. Mud log­gers mon­i­tored the ge­ol­ogy, gas flow and drilling flu­ids. Floorhands — bet­ter known as rough­necks — kept the drilling area and pip­ing clean and or­ga­nized. The com­pany man, or well site man­ager, over­saw the op­er­a­tion.

Drilling pipe, which fol­lows the drill bit and sets the well, would later be re­moved and re­placed by cas­ing pipe, ce­mented in place to line the well and give it struc­tural sta­bil­ity, and tub­ing pipe, through which the oil and gas would flow.

Crews would test the struc­tural in­tegrity of the well and con­firm that the vol­umes of hy­dro­car­bons were suf­fi­cient to en­sure the well would pro­duce for years to come. About a month later, the frack­ing crews would get started.

Semi sym­phony

Less than a mile from Ea­gles well, past scat­tered small farms, lay another drilling site, called Fight­ing Camels, af­ter the mas­cot of North Carolina’s Camp­bell Univer­sity. Here, frack­ing crews were al­ready at work.

The frack­ing site pre­sented a deaf­en­ing sym­phony of diesel mo­tors. Dozens of semi-trucks pow­ered the equip­ment that pumps mil­lions of gal­lons of a wa­ter, sand and chem­i­cal mix­ture into the wells at high pres­sure, and dozens more trucks moved on and off the site de­liv­er­ing the wa­ter, sand and chem­i­cals needed to crack the shale rock and re­lease oil and gas.

The shale revo­lu­tion is widely cred­ited to the in­no­va­tion and de­ter­mi­na­tion of one man, the late Ge­orge P. Mitchell, son of a Greek im-

mi­grant and founder of The Wood­lands. Mitchell, af­ter strik­ing it rich in oil, spent 35 years stub­bornly fo­cused on de­vel­op­ing the Bar­nett Shale near Dal­las, a play known once the “Wild­cat­ters Graveyard.”

Mitchell, how­ever, per­sisted, even­tu­ally com­bin­ing hy­draulic frac­tur­ing with hor­i­zon­tal drilling to un­lock the com­plex shale rock. Mitchell didn’t frack his first prof­itable well un­til 1998, but with that suc­cess, he sold his com­pany four years later for more than $3 bil­lion to Devon En­ergy of Ok­la­homa City.

The shale boom was soon un­der­way, pro­duc­ing oil and gas from Texas to North Dakota and the North­east. It placed the United States among the world’s big­gest en­ergy pro­duc­ers, roil­ing global mar­kets and up­end­ing more than 40 years of geopol­i­tics.

And along with oil and gas came large vol­umes of another petroleum prod­uct known as nat­u­ral gas liq­uids.

Three pri­mary com­po­nents can come out of any suc­cess­ful well: crude oil, nat­u­ral gas, which is es­sen­tially meth­ane, and nat­u­ral gas liq­uids, pri­mar­ily ethane, butane and propane. Ethane is the most preva­lent nat­u­ral gas liq­uid, or NGL, and used solely as a feed­stock for petro­chem­i­cals.

In oil-rich ar­eas such as the Per­mian, the NGLs flow out of wells as liq­uids in the stream of crude. In shale plays con­tain­ing mostly nat­u­ral gas, such as the Hay­nesville, ethane comes out as a gas, which is later sep­a­rated from the meth­ane.

At the frack­ing site, Tucker En­ergy Ser­vices of McAlester, Okla., led the op­er­a­tions for XTO. Work­ers, drag­ging heavy ca­bles and chains, wore closed-chan­nel head­sets so they could hear each other, even from a few feet away, over the roar of the truck en­gines and other equip­ment.

Nick Cre­gan, a frack­ing field engi­neer with Tucker, was cool­ing off in the op­er­a­tions trailer as he pre­pared for the next frack­ing stage, the sec­tion of well that would get pounded by the high-pres­sure wa­ter, sand and chem­i­cal slurry.

Cre­gan trav­els here from his home in Ok­la­homa, nearly 300 miles away. He works two weeks on, one week off, spend­ing too many nights in San Au­gus­tine ho­tel rooms while leav­ing his wife and four chil­dren be­hind. But the money is too good to pass up.

“It can be chal­leng­ing and it’s tough work,” Cre­gan said. “There’s a lot of fam­ily time you miss out on. It’s hardly ever in your back­yard.”

Be­gin­ning with a bang

Frack­ing be­gins with a bang — lit­er­ally. Small ex­plo­sive charges are low­ered into the well, be­gin­ning at a depth of 200 feet, and det­o­nated to cre­ate the ini­tial frac­tures in the steel cas­ing and shale rock. Next, the mix­ture of wa­ter, chem­i­cals and sand are pumped into the well at a rate of 4,500 gal­lons a minute.

The sand, known in the in­dus­try as prop­pant, keeps the tiny fis­sures open; the chem­i­cals help oil and gas to flow more eas­ily from shale reservoirs.

The first wells fracked in the Hay­nesville shale con­sumed about 2 mil­lion gal­lons of wa­ter and 2 mil­lion pounds of sand. They were fracked in fewer than 10 sec­tions, or stages.

The Fight­ing Camels well con­sumed 22 mil­lion gal­lons of wa­ter, most from pri­vately owned ponds, and 16 mil­lion pounds of sand. Frack­ing crews tar­geted 52 stages, each a 130-foot sec­tion of the well.

The frack­ing pro­ceeded with the ef­fi­ciency of a fac­tory. The sand went into a mixer where it was com­bined with wa­ter. Frack­ing chem­i­cals were added to help lu­bri­cate the well and im­prove the flow of the slurry and the re­sult­ing pro­duc­tion.

The pumping trucks then forced the mix­ture into the well and through per­fo­ra­tions cre­ated by the ex­plo­sions, shat­ter­ing the shale rock and re­leas­ing the gas. “It’s like an assem­bly line — the wa­ter, sand, pres­sure pumps and the well,” said Buddy Davis, the Tucker En­ergy Ser­vices man­ager over­see­ing the site.

The Fight­ing Camels well be­gan pro­duc­ing two months later, the Ea­gles well three months af­ter that. Some of the gas flowed into pipe­lines that fed into Exxon Mo­bil’s English Bay pipe­line sys­tem. Along the way, a pro­cess­ing fa­cil­ity sep­a­rated the gas, es­sen­tially meth­ane, from the nat­u­ral gas liq­uids.

From there, the stream of nat­u­ral gas liq­uids was piped to Mont Belvieu, about 35 miles east of Hous­ton, where the ethane was sep­a­rated from any other nat­u­ral gas liq­uids. But it wasn’t the fi­nal des­ti­na­tion for th­ese hy­dro­car­bon mol­e­cules.

It’s just the be­gin­ning of a trans­for­ma­tion that is chang­ing the flow of in­ter­na­tional com­merce.

Elizabeth Con­ley / Staff pho­tog­ra­pher

A con­trac­tor works at a drilling rig in the Hay­nesville shale in East Texas. The well is op­er­ated by XTO En­ergy, a sub­sidiary of Exxon Mo­bil.

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