The idea of powering energy intensive facilities with inexpensive methane from on-site rigs is gaining traction in the Marcellus Shale region. And one of the reasons for the interest is the intensifying focus by exploration and production companies on natural gas liquids.

NGLs, which include propane, hexane, butane, and pentanes, are produced by fractionation after well-gas is processed to separate them from methane and ethane (which can only be liquefied through cryogenic treatment).

With dry-gas pricing soft and storage capacity tight, E&P companies drilling for wet gas would potentially be amenable to selling methane at wholesale prices instead of flaring it off or storing it underground until space opens in the distribution network serving their areas.

The idea is gradually becoming a reality in Pennsylvania’s gas fields.

Moxie Energy LLC has proposed to build gas-fueled power plants on the gas fields in Asylum and Clinton Townships, PA, with the combustion turbines in each plant producing 225-to-350 megawatts (along with 250-to-300 MW more from downstream steam turbines).

Also last year, Procter & Gamble started powering its Mehoopany, PA paper mill with gas produced from on-site rigs.

Breaking Energy could not confirm that the on-site energy projects are a harbinger for imminent data-center construction in the region. But Jean-Simon Venne, vice president of Energy Efficiency at Montreal-headquartered SMi-Enerpro, told Breaking Energy that he has heard rumors of discussions “to explore the options for the right fit.”

If the discussions are occurring, it’s a sure bet that the gulf between NGL and methane pricing has helped usher the energy companies to the table. Ben MacFarlane, an NGLs analyst for Bentek Energy says NGLs are priced at a huge premium over methane on a Btu-equivalent basis.

“[Dry] gas is selling for $2.40 per MM [or million] BTU’s, right now, and natural gas liquids are selling for around $9.00 per MM BTU,” MacFarlane told Breaking Energy. “So, that’s an extra $6.60.”

Consequently, MacFarlane added, the E&P industry “is building a lot of processing plants and fractionaters. There’s a lot of money being invested into the infrastructure they need to gather, process, and fractionate that rich gas.”

Infrastructure shortfalls are hindering NGL development in the Marcellus region, MacFarlane said, pointing out that “the midstream industry has been struggling to keep up. But over the next year they’ll be bringing on a lot of new capacity that’s going to help increase the production of wet gas. Most of that will be located in Pennsylvania and West Virginia, but they will also add some capacity in Ohio.”

With all the additional dry gas thrown off by rigs in wet-gas areas, and given the soft prices for methane, E&P companies could be interested in working out deals with companies looking for lots of cheap energy.

MacFarlane says the idea would make sense “if the wells are located 50 miles from a pipeline connection.” But he hastened to add that, “In the Northeast, especially, you have many long-haul pipelines that are in close proximity to the wells.”

But many of those pipelines are fully booked with existing planned production. And that’s one reason, an energy industry insider told Breaking Energy, that many E&P companies will probably “stay home” and keep their focus on methane while waiting to release their inventories to the pipelines.

See here for the first part of this two-piece series on the Fracked Internet.