natural gas liquds

Canadian ethylene plants have been receiving U.S.-sourced ethane by pipeline for two and a half years now, and waterborne ethane exports from Marcus Hook, PA to Norway started earlier in 2016. Soon the real fun will begin, when Enterprise Products Partners initiates (and quickly ramps up) ethane exports from a new, 200 Mb/d terminal on the Houston Ship Channel at Morgan’s Point.  The destinations of the ships leaving Morgan’s Point are likely to be places like India, Brazil, Europe, and maybe even Mexico.  Today, we consider the imminent bump-up in U.S. ethane export capacity, the international markets ethane will be headed to in the near-term, and the longer-term question about how much ethane exports can grow.

Over the next three years, the production of natural gas liquids (NGLs) from the Marcellus/Utica could octuple (8X) to more than 650 Mb/d.  Nothing like that has ever happened in the NGL business before.  It has already started.  Last month MarkWest officially inaugurated the Appalachian ethane business. From 5 Mb/d today we could see 200 Mb/d by this time next year if the economics to move that much ethane made sense.  But they won’t.  Because there is nowhere for the additional ethane to go.  Already up to 250 Mb/d of U.S. ethane is being rejected – pushed back into natural gas in the Rockies, Midcontinent, and other regions.  That number will be getting a lot bigger.  Today we will begin an examination of the ethane tsunami and what it means for NGL markets in the Northeast and in the center of the NGL universe – Mont Belvieu, TX.

EIA NGL natural gas plant production statistics were posted on Wednesday and showed something we have not seen for a few months – a decline in volume.  It was not a huge decline.  And with the price of Conway ethane in the dog house over the past three months, it was not unexpected.  But given the importance of NGLs to both the natural gas and petrochemicals industries these days, it definitely warrants a careful examination of the numbers.  We can expect to see this trend to accelerate over the next few months.