Prices for non-TET propane at Mont Belvieu yesterday fell to their lowest level in 13 years at 31.0 cnts/Gal (source: OPIS). A big part of the recent price decline is to do with surging propane storage inventory. Last Wednesday’s data from the Energy Information Administration (EIA) showed U.S. propane inventory levels increased by 3.8 MMBbl to 77MMBbl during the last week of May 2015. If storage injections increase at that rate for another couple of weeks then levels will surpass the record of 81.6 MMBbl set in October 2014. The trouble is – that record was set at the start of winter – traditionally the end of propane storage build season - but we are still only in June – with several months of storage build left. Today we discuss the growing propane surplus.
Daily Energy Blog
Yesterday (June 2, 2015) spot prices for propane at Edmonton, Alberta were assessed by OPIS at an average of -0.625 cnts/gal (-26.25 cnts/Bbl). Yes you read correctly – the price was negative – meaning that producers will PAY YOU to take their propane away in Edmonton. Prices at Edmonton have been below zero before at least twice in the past 2 weeks and they averaged just 2.4 cnts/gal during May. Propane has fallen on hard times in the U.S. as well with Mont Belvieu Gulf Coast trading hub prices reaching13 year lows under 33 cnts/gal last week (back up to 44 cnts/gal yesterday) and the ratio of propane prices to U.S. benchmark West Texas Intermediate (WTI) crude hitting an all time low under 24%. Today we begin a new series on propane with a look at the Edmonton market.
In the five years since natural gas production began to take off in Appalachia, volumes in the Marcellus and Utica basins have increased by a factor of 9X. Much of that natural gas production growth is “wet” gas containing significant volumes of NGLs. Consequently NGL production volumes have skyrocketed and midstream development has been booming. But building all this midstream infrastructure in Appalachia does not work the way it does in other high-growth shale plays. Making sense out of Marcellus/Utica midstream infrastructure is the subject of RBN Energy’s latest Drill Down report, “Join Together With Demand--The Who and How of Marcellus/Utica Midstream”. In today’s blog, we provide highlights of the report and discuss what’s in store for the Marcellus/Utica over the next couple of years using our new Pipeline GIS mapping system to help tie all of the assets together.
Growing volumes of natural gas liquids (NGLs) produced in the Marcellus and Utica need to find a market – inside or outside the region. Getting them to outside markets involves transportation by pipeline, rail, truck or barge. Local demand is either from traditional “legacy” customers that consume propane, butane and natural gasoline or from new ethane-consuming projects such as proposed ethylene crackers. What’s already been done to address the demand side of the NGL equation, and what’s being planned? Today, we conclude our series on NGL infrastructure in the Upper Ohio River Valley with a look at where all those NGLs will be heading.
The fast-growing need for natural gas processing and fractionation capacity in the Marcellus/Utica is creating tremendous opportunities for midstream companies. But determining which assets to develop and when to develop them is complicated by the volatility of hydrocarbon markets, and by the fact that the region has only minimal NGL storage capacity. In today’s blog, we continue our in-depth review of NGL-related infrastructure in the Upper Ohio River Valley with a look at Blue Racer’s existing and planned assets there.
Natural gas processing in the Marcellus and Utica plays has quickly become a much larger—and more complex—business as major players race to keep up with fast-rising capacity needs and to ensure that the various elements of their infrastructure operate as an integrated, well-oiled “machine”. And, in a region with only minimal NGL storage capacity, one of that machine’s most important characteristics must be an ability to deal with all the “what-ifs” that could otherwise lead to logistical chaos, particularly those issues dealing with ethane. Today, we continue our in-depth review of Marcellus/Utica NGL infrastructure with a look at MarkWest’s innovative NGL network and distributed de-ethanization system.
Natural gas liquids production in the Utica and “wet” Marcellus has taken off like a rocket, and all that ethane, propane, butane and natural gasoline needs to be either moved out of the region or consumed there. That presents a real operational challenge to midstream companies, mostly because the Upper Ohio River Valley offers very little of the NGL storage capacity that Mont Belvieu—the center of the NGL universe—has in spades. Storage is the mechanism that helps balance out supply and demand on any given day. How can the nation’s fastest-growing NGL production play function without the luxury of significant NGL storage? Today, we continue our look at infrastructure development in the region.
Fast-rising hydrocarbon production of “wet” natural gas in the eastern Utica and southwestern Marcellus has been creating tremendous opportunities for the small group of midstream firms that saw what was coming—and pounced. Gas processing capacity in the Utica/Marcellus as a whole now tops 7.6 Bcf/d, more than 12 times higher than five years ago.
In the past 10 years Marcellus and Utica shale drilling has transformed the U.S. Northeast from a sleepy backwater of gas production into a powerhouse that (according to the Energy Information Administration) supplied 22% of total U.S. gas production in December 2014. NGL production from the region is already 8% of the U.S. total and likely headed toward 20% by 2020. These vast shale formations cover most of Pennsylvania, West Virginia and Eastern Ohio, but it turns out that most of the production comes from only 20 or so counties across those three states. Such geographic concentration has significant implications for regional infrastructure development and capacity. Today we describe where producers have found success in the region.
In the five years since gas production began to take off in the Marcellus, gas processing capacity in the northeast has expanded nearly 13 times over from 600 MMcf/d to 7,600 MMcf/d. Natural gas liquids (NGL) production from those plants began to expand significantly in 2011 and is now over 245 Mb/d. Midstream companies have developed gas processing infrastructure from a small group of stand-alone plants into a fully integrated system designed to operate without the luxury of significant NGL storage capacity. Today we begin a new series describing how the innovative infrastructure build=out has overcome regional constraints.
With prices for crude oil, natural gas and natural gas liquids still sagging, U.S. producers have been shifting their drilling focus to “sweet spot” wells in the nation’s most prolific plays, including the Permian Basin and the Eagle Ford. Capital spending plans for 2015 detailed the past few weeks show that, even with fewer active rigs and fewer new wells, hydrocarbon production in these best-in-class areas will continue to grow this year. As for next year and beyond, that depends. What does all this mean for NGL production—and expanded NGL-related infrastructure in the Permian and Eagle Ford? Today, we preview RBN Energy’s latest Drill Down report, which forecasts NGL production in the two plays and details existing and planned gas processing plants, NGL pipelines and fractionators there.
The recent collapse in oil prices has thrown into question the future levels of crude, natural gas and NGL production in, among other places, the Permian Basin and the Eagle Ford. That will lead midstream companies to take a fresh look at the two regions’ existing and planned infrastructure to make sure they still are in line with pipeline, processing and other needs. Today, we conclude our series on the two regions’ natural gas processing plants, NGL pipelines and fractionators with a look at where we stand, and what’s ahead.
The prolific, liquids-rich Permian Basin and Eagle Ford plays have attracted more than a dozen midstream companies interested in meeting the growing need for natural gas processing plants, fractionators and natural gas liquids pipelines. Some of the larger players have assembled broad-based portfolios of assets, while others have focused on more stand-alone NGL pipeline or gas processing investments. Today we begin wrapping up our series on NGL-related assets in two of the nation’s most important shale plays.
Lately the ethane market seems out of whack. Ethane production continues to increase even as it’s become the lowest margin (highest cost) feedstock for Gulf Coast petrochemical crackers – it’s main market. Ethane production by processing plants has been at an all-time high since June this year even as ethane prices fell to historical lows. Meanwhile, ethane inventories have fallen from their recent peak in July. How can all that make sense? Today we speculate as to what may be going on.
While uncertainties remain about the future of U.S. hydrocarbon production in a time of low oil prices, natural gas producers in the Permian Basin and the Eagle Ford have made it clear they will continue to need more gas processing capacity. After all, the oil price slide has led many producers to shift their focus to sweet spots in the best, liquids-rich shale plays that produce crude, associated gas and natural gas liquids. There are two ways to add gas processing capacity—build it or buy it—and, with demand for processing capacity in the Permian and Eagle Ford potentially still rising, Targa Resources is doing both. Today we continue our look at gas processing plants, NGL pipelines and fractionators in two key NGL production plays near Mont Belvieu, TX, the center of the NGL world.
