Over the past five years, the production of natural gas liquids from gas processing plants has soared by almost 2 million barrels per day (2 MMb/d), or about 60%. That has been great news for natural gas producers, processors, and end-use markets. But there is a catch: the rate of production does not match up with demand. While production is a steady, “ratable” volume, demand is anything but ratable. Demand swings with the gasoline blending season, cold weather (or lack thereof) in the propane market, export demand, petchem feedstock economics, the impact of COVID-19 on transportation fuels, and a myriad of other factors. The flywheel that balances supply and demand on any given day is storage. Not just any storage, though. For NGLs, storage of large volumes means salt caverns. Huge caverns thousands of feet below the surface. Today, we update one of RBN’s Greatest Hits blogs and take a deep dive into the history of NGL storage — all the way back to Smoky Billue.
NGL Storage Recap
We’ve looked at NGL storage frequently, including in a Backstage Pass Drill Down report (Wild Ride - What’s Driving NGL Prices) and, most recently, in the RBN blogosphere, where last year we reviewed Texas NGL storage facilities in a four-part blog series (Friends (and NGL Storage) in Low-Lying Places). We have explored the huge NGL storage facilities at Mont Belvieu, where over the past 60-plus years about 260 MMbbl of storage capacity has been developed — more than anyplace else in the world. Figure 1 lays out the capacity operated by the big players in Mont Belvieu (left pie chart) and elsewhere in Texas (right pie chart).
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