On a clear but windy day last July in Qidong, China—about 40 miles outside of Shanghai—a crowd of dignitaries, innovators, business men and women, big thinkers and well-wishers gathered near the water. They were there for a naming ceremony that would also serve as both a culmination and a kick-off.

The culmination was the result of more than a billion dollars and 4 million man hours—the results of which were docked in front of the crowd, two massive new ships that are literally in a class all their own: Dragon Class, a new designation for an entirely new design and a brand new undertaking.

That undertaking is the kickoff the crowd also was there to celebrate, because as the ships set sail—first to South Korea, and later to Marcus Hook, Pa., just outside of Philadelphia—a new era in shale gas will have begun. It’s a story that is emblazoned on the side of each ship in giant letters, the first one reading “Shale Gas for Manufacturing,” the second reading “Shale Gas for Chemicals.” And like the pioneering of the Marcellus in 2004, it’s a story that can’t be told without Range Resources.

‘A great day’
Chad Stephens, Range’s senior vice President of corporate development, was in Qidong for the celebration. “It was a great day, and a big international affair. And I have to tell you, when I got off the bus and actually saw the two ships nose to nose at the dock, I thought ‘man, these guys know what they’re doing.’ It was a thrilling day and very gratifying given the amount of general market skepticism when we first announced the project,” Stephens said.

An understandable reaction, as Stephens had been part of the team that worked diligently, for years, to put together a deal that would ultimately result in a unique partnership between Range Resources, MarkWest Energy Partners LP, Sunoco Logistics Partners LP and INEOS, a European chemical company. Today, INEOS is a global manufacturer of petrochemicals, specialty chemicals and oil products, with sales of approximately $54 billion. But in the early days of negotiations with Range, it was less well known than some of the other international chemical giants.

Curtis Tipton, Range’s vice president of Marcellus development, was also part of the team that worked on the deal. “To understand how the INEOS deal came together, you have to go back several years to the point where we realized we had what came to be referred to as ‘the ethane issue.’ We recognized our acreage in Washington County, Pa., was going to be wet. And that gas would need to be processed."

Fortunately, as Tipton explained, “We had some time to solve this problem, a problem that became an opportunity.”

First, there were major hurdles that had to be cleared. One of the biggest was doubt about the Marcellus. “We had to convince folks that the Marcellus was a serious play, and our ethane was a contender,” Tipton said. “The team made a lot of calls, and a lot of people told us we were nuts. They don’t think so now.”

“We also had to do a thorough rundown on all of our options for moving ethane,” he continued. “Can you rail it? Ultimately, that answer was no. Can you barge it? That turned out to not be a great option either. The best way to move ethane is by pipeline.”

The limitations of the product also put limitations on who Range could sell it to.

“There’s only one thing you can do with ethane,” Stephens explained, saying the one thing you can do is a critical component of modern living, however. “It’s a building block for all plastics.”

The first Dragon Ships were named during a special ceremony in Qidong, China. (Source: Range Resources)

INEOS ship naming
As the team was exploring solutions to Range’s “ethane problem,” the European chemical company Range would ultimately partner with was experiencing some problems of its own. While in the U.S. it was becoming clear that the Marcellus held an incredibly rich supply of natural gas, the team at INEOS was watching their own supply of gas from the North Sea in Scotland dwindle. And they faced volume restrictions in Norway that would have made it difficult if not impossible for the company to continue normal operations at its ethane cracker plants in Europe. Hundreds, if not thousands, of jobs were at stake—along with billions of dollars in potential lost revenue.

INEOS needed natural gas. Southwestern Pennsylvania had it.

But the volumes the European company needed to supply its cracker plants in Grangemouth, Scotland, and Rafnes, Norway, were far beyond any amount of ethane that had ever been shipped before. Transporting that amount of product would require a transatlantic pipeline—a literal impossibility. Transport by ship was the only option but at that time, it too was impossible—there was no ship or fleet in existence that could transport significant volumes of ethane that far. It had never been done. And many said it couldn’t be done.

There was also the issue of the location of the gas in southwestern Pennsylvania. It wasn’t near a port. It was in fact 300 miles away from the coast.

Mariner East
For hundreds of years, transporting goods from one end of Pennsylvania to the other has been an important economic goal for American companies. And for much of that time, a significant barrier known as the Allegheny mountain range hasn’t made it easy. In the mid-1800s—an extraordinary engineering accomplishment known as the Allegheny Portage Railroad linked the eastern and western sections of the state’s canal system—and reshaped the economic destiny of Pennsylvania.

In 2015, that destiny is being reshaped once again, with another connector—this one known as Mariner East.

But before there was Mariner East, there was its pipeline precursor: Mariner West.

“We kept making calls about our ethane to different companies and getting a lot of ‘no’s.’ But finally, we got some traction with a company called NOVA. I ended up flying to Calgary, and it became clear they were interested in our product,” Tipton said.

Ultimately, a deal was struck between Range, MarkWest, Sunoco and NOVA, “and Mariner West was born,” Tipton continued. With Mariner West, Range would begin exporting ethane to Canada.

In the meantime, the team was still making calls. At the recommendation of another chemical company, Range contacted INEOS and negotiations began.

A primary issue that had to be resolved was transporting the ethane from southwestern Pennsylvania to a port in Philadelphia. There was an existing pipeline in place, but it was set up to move refined product east to west. Once again, MarkWest, Sunoco and Range were at the table, this time with INEOS. There was a way to make the pipeline that would become Mariner East work, but it would need the right terminal to handle the ethane port side.

Marcus Hook

For 110 years, a busy East Coast oil and gas processing site known as Marcus Hook operated alongside the banks of the Delaware River. Changing market conditions in 2011 led to a shutdown of the more than a century-old refinery.

That closed refinery was the solution that Range, INEOS and their partners were seeking. A deal was reached to bring the shuttered site back online, and in the three-plus years after Marcus Hook closed its doors, Sunoco has invested billions of dollars to create a world-class chemical production, gas storage and distribution center. New dock facilities and storage tanks will enable the INEOS fleet of Dragon Ships to be loaded with cargo that came from Range wells, and routed to Europe.

When the plan was first announced in 2012, U.S. Sen. Pat Toomey (R-Pa.) said, “I’m pleased to see Pennsylvania take a leading role in securing our domestic energy future. Connecting Delaware County to Western Pennsylvania’s Marcellus Shale development will help support good-paying jobs in our commonwealth. [This] announcement is an important step in ensuring America’s energy independence and expanding its role as a global energy exporter.”

More recently, a 2015 study released by Philadelphia-based Econsult Solutions Inc., indicated that Sunoco Logistics’ pipeline infrastructure projects, Mariner East and the Marcus Hook Industrial Complex, will generate nearly $4.2 billion in economic activity in Pennsylvania, support an estimated 30,000 construction jobs and generate nearly $62 million in new tax revenues to the commonwealth.

The JS INEOS Ingenuity proudly bears “Shale Gas For Chemicals.” (Source: Range Resources)

Insight and ingenuity
With contracts in place and a means of getting ethane to port, the ships that would transport the ethane still needed to be built. For such an enormous task INEOS reached out to Danish fuel and shipping company Evergas.

As one of the world’s leading seaborne transporters of petrochemical gases and natural gas liquids—Evergas understood perhaps better than anyone else what it would take to transport ethane in the quantities sought by INEOS over the distances required. Clearly, the vessel needed to be large, with storage capacity to match. However, if they went too big, it could take too long to fill the tanks, resulting in lost time better spent en route to the ship’s destination.

They also had to be able to dock the ships at existing ports in Grangemouth and Rafnes. With those factors in mind, a decision was made to build the ships with a capacity of 27,500 cubic meters and the capability to carry a range of products, including ethane, propane and LNG.

Prior to transport, ethane has to be supercooled and liquefied to -90 C (-130 F). Previously at that temperature, it had only been shipped on small vessels on much shorter routes. Taking significantly larger quantities across the Atlantic Ocean presented a new challenge. According to Hans Weverbergh, operations manager at Evergas, “There were no ships in the world that had pressurized tanks that could carry this amount of ethane. It was something that had never been done before.”

INEOS also wanted the Dragon Ships to be able to run off of their cargo of ethane—another design challenge. In the end, the ships were designed to be run on either diesel, LNG, or the ethane they transport—and the fuel source can be changed instantly without any loss of speed or power. In gas mode, the engines produce 25% less CO₂ and 99% less sulfur dioxide.

Once Evergas completed the design, the construction of the ships was awarded to one of the largest shipbuilders in the world, Sinopacific Offshore and Engineering, in China, which specializes in high-tech products for the oil and gas industry. In all, more than 5,000 people and 2 million manhours were needed for the construction of the Dragon Ships.

In front of the crowd of celebrants in Qidong, the new Dragon Ships were officially named. The JS INEOS Insight carries the slogan, “Shale Gas For Manufacturing” along its side; the JS INEOS Ingenuity proudly bears “Shale Gas For Chemicals.” In 2014, INEOS contracted with Evergas for an additional six vessels: Intrepid, Inspiration, Innovation, Intuition, Invention and Independence.

Jim Ratcliffe, INEOS founder and chairman, is gratified to see the project moving forward, and excited about the future.

“We’re going to move more than 40,000 barrels of gas a day, every day of the year, for 15 years, from the U.S. to Europe. Any way you look at it, this is an extraordinary achievement,” Ratcliffe said.

That sentiment is shared by Stephens, Tipton and the rest of the Range team, as a deal that took years to put into place is finally coming to fruition. As Stephens looks back, he is proud of the team that continues to work so hard.

“There was a lot of industry skepticism, people saying ‘you can’t do it.’ But we were optimistic, and we have a great partnership with INEOS. They’ve done everything they said they were going to do and more. It’s been a real global collaboration, and it brings such credibility and validity to Range. We’ll be the first company to export ethane from the United States to Europe. Not one of ‘the big guys.’ It’s Range. That’s huge,” he said.

Jeff Ventura, president, chairman and CEO of Range, credits a team of people, working together on an effort unlike any other.

“It was an incredibly creative solution to what was at one time viewed as a problem—what to do with our ethane. In Texas and in Oklahoma, there was infrastructure in place in to process wet gas. When we were getting started in Pennsylvania, there wasn’t. So for the team to work so hard to come up with this innovative plan that not only benefits Range, but is also creating jobs in Pennsylvania and has global impact—it’s incredible. And as we’re about to see it launch, it’s a win for all of the companies involved, for consumers across the globe, for landowners and workers. It’s a story that exemplifies challenges overcome.”

Right now, the ships are loading propane from Range Resources wells, ethane is expected to follow by the end of year.