The ethane ratio-to-natural gas has been on a wild ride during 2026. In late January when the price of natural gas soared to $7.46/MMbtu in response to Winter Storm Fern, the ethane-to-gas ratio was crushed to 0.53, the lowest level in at least 20 years. The ratio rebounded in early spring, in part due to the impact of the Iran war, fell back below 1.0 in late May, but has now recovered to average 1.15 last week (right graph below).
The ratio, which compares Mont Belvieu ethane prices to Henry Hub natural gas on a BTU basis is an indicator of ethane rejection economics. When ethane prices are lower than natural gas on a BTU basis (below the red line), more ethane is “rejected” at the natural gas processing plant and sold as natural gas, assuming there are no physical or contractual constraints on doing so.
The ethane-to-gas ratio averaged 1.06 in 2025, and 1.08 so far in 2026, both relatively weak numbers (left graph). The ratio’s return to the 1.15 level means gas processors will be motivated to recover more ethane. Most of that incremental ethane production will be exported to global petrochemical markets.
