(Wall Street Journal – June 26, 2012) By Tom Fowler and Ben Lefebvre. Energy producers struggling with decade-low natural-gas prices have been relying on related fuels such as ethane, propane and butane to remain profitable. But so many companies have increased drilling of wells with the fuels, known as natural-gas liquids, that their prices are falling as well, creating a new supply-glut problem for the industry and threatening to crimp profits.
WSJ.com - For Energy Producers, Natural Gas May Not Be the Only Source of a Glut
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Prices for ethane have collapsed in many parts of the country as supply far outstrips demand from chemical plants that use it as a feedstock for plastics. Ethane at the Mont Belvieu, Texas trading hub, a traditional pricing benchmark, sold for 28.4 cents per gallon Tuesday, down from a peak average of 89 cents in October, according to Platts research. Propane at Mont Belvieu sold for 79.65 cents per gallon, down from $1.47 a gallon in October.
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Though weaker prices are likely to affect profits, they don't necessarily mean companies will lose money producing natural-gas liquids anytime soon, said Rusty Braziel, president of consulting firm RNB Energy.
"CEOs may not be as happy as they were a couple of months ago, but you won't see them panhandling on the street," Mr. Braziel said.
