NGL Price Forecast

Massive infrastructure investments in petrochemical steam crackers and export terminals for propane, butane and ethane are in the works.  But the market has changed since the investment decisions for many of these facilities were made.  Instead of the low ethane prices the petrochemical market is enjoying today (about 19 cents/Gal), prices could ramp up to 50 cents/Gal by 2020 as new steam crackers and ethane export facilities come online.  If ethane prices increase and crude oil prices remain below $65/bbl, the feedstock cost advantage of ethane versus naphtha that the new petrochemical facilities expected likely would not materialize.  Lower crude oil prices would also cap production growth of all NGLs, limiting the volumes to be exported through the new terminals.  Today we review Part 2 of our Drill Down Report on NGL Infrastructure.

If it persists, the oil price crash may have undermined many of the assumptions behind massive infrastructure investments in steam cracker plants and export facilities for natural gas liquids (NGLs). These projects expected to take advantage of booming domestic NGL production and low NGL prices relative to crude. Yet take-or-pay commitments and committed investment in plant infrastructure means they may be exposed to  poor returns if crude prices remain low. Today we detail analysis in the latest RBN Energy Drill Down Report to develop NGL supply, demand and pricing scenarios.