Serendipity, Coincidence, Or Thinking Outside The Box? Connecting Some Dots -- Reason #47 Why I Love To Blog -- October 1, 2015

A couple of days ago it was announced that Badlands NGLs was going to build a $4 billion petrochemical plant in North Dakota with feedstock (ethane) to be supplied by CLR.

Read that linked article and then read this Forbes article sent by a reader.

A couple of data points. First, Hess recently expanded its Tioga, ND, natural gas processing plant to produce ethane that it will send to a Canadian petrochemical plant. In that article (note the date of this article -- last year, 2014):

The expanded gas plant now produces ethane, a new product for North Dakota. The ethane is transported by pipeline to a plastics plant in Alberta, Canada.

The production of ethane is significant for North Dakota, with several companies looking at petrochemical manufacturing opportunities in the state, said Director of Mineral Resources Lynn Helms.

“It really starts a whole new era for North Dakota,” said Helms, one of several state officials who attended the event. “With the growth in gas production in North Dakota, petrochemical manufacturing out of ethane is right on the doorstep.”
North Dakota Commerce Commissioner Alan Anderson said the possibilities are exciting for the state.

“The question becomes, Why not have a plastic plant in North Dakota instead of shipping it all the way to Canada?” Anderson said. 

Now back to the Forbes article linked above:

In the meantime, producers in the region have suffered through a long, hot, and expensive summer. The NGL revenues which provided a nice boost to producer cash flows in earlier years have dwindled as increased production necessitates moving barrels farther away from the producing area for storage or export during the summer.  Figure 2 illustrates the pain level experienced by a producer who must remove some of the ethane in the gas stream to meet pipeline Btu requirements. Since there is currently no ethylene market in the Northeast, the Enterprise ATEX ethane pipeline to Mont Belvieu provides assured flow, but at a cost – for now.

Given this scenario, the prospect of exporting ethane later this year on Mariner East 1, to a different target market in Northwest Europe, makes moving additional barrels east to Marcus Hook more attractive. The new Mariner East 2 line will expand capacity to move other NGLs as well, adding more propane and butane to the volumes that can move to an East Coast port via pipeline in summer 2017. 

Bottom line: Some operators are planning to ship ethane all the way to Europe. 

The poll remains open: where you do think the proposed $4 billion petrochemical plant will be sited in North Dakota.

Now, switching gears. It is my impression that products coming from any petrochemical plant will be moved by rail. Who owns THE railroad in North Dakota? (Hint: his initials are "WB" and he lives in Omaha, Nebraska). Second question: who just bought a gazillion more rail cars? (Hint: his initials are "WB" and he lives in Omaha, Nebraska)?

Buried in this story is the answer, and I would have missed it except for the eagle eye of Don who caught it (and another reader caught a similar story in Bloomberg but that story did not say who bought the rail cars; the WSJ story does):

General Electric Co., which is actively selling GE Capital assets to focus more on core industrial activities, announced two deals for railroad services operations that have been part of GE Capital.

The conglomerate agreed to sell its tank car fleet assets and railcar repair facilities to Marmon Holdings Inc., with part of the deal closing on Wednesday and the rest slated for a fourth-quarter closing. Diversified industrial organization Marmon is part of Berkshire Hathaway Co.

We'll just tag this under "PCPBR" -- petrochemical products by rail.