UNION CITY -- Unseen pipelines, buried beneath the ground in western Pennsylvania and New York, carry natural gas from about 6,500 wells.
Those wells, many in service since the 1980s, provide gas to National Fuel Gas Distribution Corp. and help meet the need for 12 million cubic feet a day at a gas-fired power plant in Jamestown, N.Y.
But Oivind Risberg, a native of Norway and the founder of EmKey Energy LLC, the owner of that pipeline network, has been thinking for years about its untapped potential.
After 10 years of planning, EmKey Gas Processing LLC has opened a new $10 million gas processing plant just east of Union City, where five of Risberg’s underground pipelines converge.
The plant, at the end of a long gravel lane, is actually a series of open-air installations of compressor units, 30,000-gallon storage tanks, towering vent pipes and complex equipment that cools the gas to nearly 140 degrees below zero and separates out the liquid components of butane, propane, ethane and liquid natural gas.
Inside a nearby office, operations manager Kyle Rhoades tracks the separation process, which takes only a minute or two, from a computer bank that measures track flow and temperatures, and alerts staff to any safety concerns.
Though expensive to extract, separating these components adds up to found money.
Just a few weeks after the new plant was christened with bottles of Champagne and steaks -- cooked on a gas grill, using propane produced on site -- the facility is separating out about 8,000 gallons a day of butane, propane, ethane and liquid natural gas.
Risberg hopes eventually to bump that total to 10,000 gallons.
The timing was right. Risberg said separating the component parts from the methane makes the most economic sense when there’s a substantial gap between the price of natural gas and the price of crude oil.
With crude oil selling for more than $100 a barrel, the difference in price is near an historic high.
“Our risk is if oil significantly declines and gas prices rise, then we get into a squeeze,” he said.
The new plant is processing about 10 million cubic feet of gas per day, much of it supplied by 30-year-old wells.
Some of those wells could play out in the next few years, but Risberg said he expects others will remain viable for an additional 30 or 40 years. That existing production -- supplying more than 9 billion cubic feet annually to more than 200 commercial and industrial accounts -- was enough to justify his investment.
But Risberg’s new plant was built on the hope that drilling in the Marcellus and Utica shale will expand locally.
“We are going to have enough money to make this work and pay our bills without shale,” he said.
But Risberg, who has more than 20 years of experience in the oil and natural gas industry, believes it’s only a matter of time before deeper and far more productive shale wells are drilled in this area.
“That will be when the rewards come,” Risberg said.
John Elliott, chief executive of DevelopErie, which provided EmKey a loan and sponsored a second loan for the new Union City plant, sees it as a hopeful development for the region.
“Shale gas development in our region will have a significant impact on our economy,” Elliott said. “EmKey’s investments will directly create jobs, and also lower energy costs for companies connected to his pipelines. We really like his project.”
For his part, Risberg touts the benefits of using local resources, not gas piped hundreds of miles from the Gulf Coast.
“It’s very clean. It’s cheap, local and plentiful,” he said.
More importantly, he said, it’s good for the economy.
“If you have cheap energy, you’re going to have more jobs,” he said.
Risberg said he looks forward to more shale drilling and to boosting daily processing capacity to 15 million cubic feet.
But Risberg, whose family is in the process of moving to Erie from Norway, said he’s investing for the long term, and doesn’t expect payback.
“Everything in our business is not overnight,” he said. “Everything is five- to 10-year opportunities. You need to wear your long-term glasses.”
JIM MARTIN can be reached at 870-1668 or by e-mail. Follow him on Twitter at twitter.com/ETNmartin.
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