Lone Star NGL

As we said in Part One of this series, the production of NGLs has risen sharply in the past five years, and the pace of growth is only increasing. In response, the four leading fractionators in Mont Belvieu have been adding new capacity and planning more. They also have been adding pipeline capacity to move NGLs in and out of Mont Belvieu’s massive storage capacity and building and expanding export terminals nearby to facilitate the export of LPG, ethane and other NGL-based products to consumers overseas. We also discussed how geography and geology have helped to make Mont Belvieu (30 miles east of Houston) the center of US fractionation activity. As we said, it is located near several oil and gas production regions; it is in the heart of petrochemical production; it is along the coast (a must for importing and exporting); and it sits atop one of the world’s largest salt dome formations). Finally, we talked about how fractionators in Mont Belvieu compete with each other for business primarily on price (fractionation fees) and logistics (the ability to provide the pipelines and storage needed to smoothly move product through the process), and how fractionators in other regions are always looking to take some of Mont Belvieu’s market share.

Ever-increasing production of natural gas liquids is driving another round of fractionation capacity expansions in Mont Belvieu, TX, which is—and will remain—the hub of US fractionation activity.  But Mont Belvieu fractionators are not without competition. Huge increases in fractionator capacity are also coming on-line in Appalachia to handle the rising volumes of natural gas liquids (NGLs) coming out of the Marcellus and Utica.  Mont Belvieu may be king of fractionation, but others want a share of the kingdom.  Today we update the ongoing NGL production boom and plans to add fractionation capacity in Mont Belvieu and NGL-related export capability nearby.