With its recently completed acquisition of MarkWest, the largest NGL operator in the Marcellus and Utica shale plays, Marathon may be planning a $1.5 billion to $2.0 billion alkylation facility in that region. This will facilitate access to butane feedstock in the U.S. Northeast, allowing for alkylate production closer to Marathon’s midcontinent retail outlets.
With government regulations requiring higher octane ratings, both companies saw the need for octane boosters coming when they merged in 2015 to provide the resources for a stand-alone alkylation plant in Appalachia, far removed from any oil refinery. According to a recent comment in the trade press from Scott Garner, vice president of corporate development and joint venture management at MarkWest, the alkylation plant could be located next to, or nearby, MarkWest’s Hopedale NGL processing facility in Jewett, Ohio, where MarkWest has plenty of cheap butane to monetize.
On March 16, normal butane traded at 55 cents per gallon, down from $2.21 five years ago. According to press reports, the alkylate could be sold to other refineries.