The East Coast region is most dependent on rail to transport hydrocarbon gas liquids (HGL), according to a new EIA data series published in Movements of Crude Oil and Selected Products by Rail. EIA’s HGL-by-rail data include shipments of propane, propylene, normal butane, and isobutane between and within Petroleum Administration for Defense District (PADD) regions and to and from Canada. In the East Coast region (PADD 1), more than half of the production of these fuels is moved by rail. The additional inter- and intra-PADD rail movements of HGL, along with increased natural gas processing capacity, support increased natural gas production there.
Between 2010 and 2016 through November, natural gas marketed production in PADD 1 grew from a little less than 3 billion cubic feet per day (Bcf/d) to more than 18 Bcf/d, with Pennsylvania and West Virginia accounting for all growth. The midstream industry significantly expanded natural gas processing capacity in the region during this time period to accommodate the rapid growth, but the capacity to move the extracted HGL within and out of PADD 1 via pipeline was constrained. Rail, therefore, became an important option for producers who needed to move their rising output of HGL to market, particularly in the summer months when in-region demand is low and storage capacity is scarce. Production of the four HGL that move on rail in the Appalachian No. 1 refining district, which includes counties in western Pennsylvania and all West Virginia, grew from 24,000 barrels per day (b/d) in 2010 to 174,000 b/d in the first 11 months of 2016. These counties’ share of production grew from under 40% to nearly 85% of PADD 1 output.
In regions such as the Gulf Coast (PADD 3) where the Barnett, Permian, and Eagle Ford shale formations are located, more extensive pipeline systems were able to accommodate transport of the growing HGL supply. Adequate pipeline capacity is lacking in the Northeast, and midstream companies continue to expand the HGL pipeline network there so that in time, capacity to ship HGL by pipe from the Appalachian region may increase. The nature of the East Coast market and the anticipated growth in natural gas and HGL production in the region suggest that rail will continue to have a role in intra- and inter-PADD 1 HGL transport.