Magical Mystery Tour, Part 3 - More on Mont Belvieu's Fractionation Capacity and Related NGL Assets

The NGL storage and fractionation complex in Mont Belvieu, TX, now offers 2.1 MMb/d of fractionation capacity — the largest concentration of fractionators in the world. As impressive as that may be, though, NGL production growth in the Permian Basin, the SCOOP/STACK and other liquids-rich plays is quickly ramping up the demand for fractionation services and challenging Mont Belvieu’s ability to keep up. A number of new fractionators are being added, but will they come online soon enough? Today, we continue our review of fractionators, NGL and purity-product storage and other key infrastructure within and near the NGL Capital of the World.

This is the third episode of our blog series on a fast-shrinking gap between Mont Belvieu’s fractionation capacity and the volume of mixed NGLs that need to be fractionated. It’s an important issue –– natural gas processors, NGL shippers, Gulf Coast steam crackers, and exporters of NGL purity products like ethane, propane and normal butane depend heavily on the big players in Mont Belvieu to efficiently receive and store mixed NGLs (y-grade), fractionate y-grade into purity products and either distribute those to U.S. end-users or pipe it to nearby marine terminals for loading onto ships.

In Part 1, we discussed rising NGL production in the Permian, the SCOOP/STACK and other key basins; potential U.S. NGL production — including ethane that is rejected into natural gas — is now approaching 5 MMb/d. We also noted that a number of new, ethane-consuming steam crackers are coming online along the Texas and Louisiana Gulf Coast, conveniently close to the NGL storage and fractionation hub in Mont Belvieu. And we talked about the strong export market for liquefied petroleum gas (LPG) — propane and normal butane — which averaged more than 1 MMb/d in the first five months of 2018 (almost all of it being shipped out of Gulf Coast ports), and for ethane exports too. The rapid run-up in U.S. NGL production — combined with the reluctance of producers to commit to new fractionation capacity — has the existing fractionation plants in Mont Belvieu running flat-out to keep up. We’ve also heard that (at least in some cases) per-barrel fractionation costs have been rising in response to the tight fractionation-capacity situation.

In Part 2, we started a company-by-company review of the Big Five fractionation players in Mont Belvieu, with a look at Enterprise Products Partners, which has more fractionators (nine) and more fractionation capacity (755 Mb/d) than anyone else there. We also discussed the Enterprise-owned NGL pipelines that transport y-grade to Mont Belvieu, its NGL and purity-product storage, and its Houston Ship Channel export terminals for LPG and ethane. Today, we turn our attention to fractionation capacity owned by Targa Resources as well as Energy Transfer Partners.