Shale Gas Production Economics Spreadsheet Model

RBN Backstage Pass subscribers can download the Processing Economics Model by clicking the link below.

Even though ethane prices have recovered by about 4 cnts/gal from the lows last week (January 14, 2013) most gas processing plants are still faced with ethane rejection economics. The past two blogs in our Gas Processing Economics series examined the impact of ethane rejection for a specific plant configuration, running a range of Eagle Ford gas streams.  But Eagle Ford gas is quite rich and high in ethane content – certainly not representative of the overall market.  Is it possible to use the RBN Gas Processing model to look at the aggregate market for U.S. gas processing?  That answer is yes, if you don’t mind hacking your way through some EIA statistics and manipulating a few input variables.

Over the past week (Jan 13-20, 2013) the ethane-to-gas ratio has recovered slightly from 0.99 to 1.05, mostly due to a 3 cnt/gal increase in the price of purity ethane at Mont Belvieu (OPIS 24.5 cnts/gal).  [See today’s Spotcheck “Ethane to Henry Hub Gas Ratio” graph.  Click here if you have trouble accessing Spotcheck.]   But that does not change the fact that the ethane market is still deep in ethane rejection territory.  What does it mean for gas processing economics?  And how do different gas streams impact NGL recoveries, ethane rejection and tailgate gas volumes.  That’s what we’ll examine today.