Rising U.S. production of NGLs and so-called “purity products” like ethane and propane, as well as growth in steam cracker capacity and NGL and ethylene exports, are giving added importance to NGL and ethylene storage capacity in underground salt caverns along the Gulf Coast. Mont Belvieu, TX, has long been the epicenter of both fractionation and salt-cavern NGL storage — and it will remain so — but there are other areas along the Texas coast with frac capacity and NGL storage, as well as steam crackers and export docks. The questions now are, is there enough in the right locations, and can what’s stored there be received and quickly sent out? Today, we begin a look at existing and planned NGL storage facilities along the Texas coast that are not in Mont Belvieu.
Increased production of crude oil and natural gas in a number of major U.S. shale plays has resulted in higher and higher production of mixed NGLs — also known as y-grade. We have chronicled these gains in a number of RBN blogs, including Bring It On, where we noted that in 2019, produced volumes of NGLs (not counting ethane that is “rejected” into natural gas) are approaching 5 MMb/d — roughly double their level back in 2012 — and production is expected to increase by another 1 MMb/d by the mid-2020s. (The Permian and Marcellus/Utica account for significant shares of the NGL production gains in recent years.) We have also blogged about the new NGL pipeline capacity being built to transport y-grade to fractionation and NGL storage hubs; the shortfall in fractionation capacity that emerged last summer (see Hotel Fractionation); the development of new ethane-based steam crackers, most of them along the Gulf Coast (see Reason to Believe); and the build-out of new LPG export capacity (see Between Mont Belvieu and the Deep Blue Sea — and, with a late-July update, People Get Ready).
Storage capacity and the ability to quickly move y-grade and purity products to where they need to be are critically important to those who produce, transport, fractionate and consume NGLs. For example, y-grade being piped to a fractionation hub (or individual fractionator) needs to be put into storage while it awaits fractionation, and once y-grade is fractionated, each of the resulting purity products needs to be put into its own, distinct storage facility until it is transported further down the supply stream. Also, steam crackers and export terminals need to receive and store purity products (ethane, propane, normal butane, etc.) for use and for loading onto ships, respectively.