There’s an interesting aspect to the buildout of new Permian gas processing capacity, NGL pipelines, fractionators and NGL export terminals, namely that virtually all of the projects are being undertaken by midstream companies that handle NGLs along their entire value chain, from wellhead to water.
The rapid buildout of Permian gas processing plants and other NGL-related infrastructure in Texas and southeastern New Mexico isn’t just continuing, it’s accelerating. In today’s RBN blog, we discuss the latest project announcements and why gas and NGL production in the Permian are still rising.
Even if Permian crude oil production were to stagnate over the next few years, the region’s output of NGLs would likely increase by half, from the current 3.2 MMcf/d to about 4.8 MMcf/d in 2030. Anticipating that growth, NGL midstreamers are planning new NGL pipeline capacity from West Texas to the Gulf Coast.
NGL production in British Columbia has been on the rise. Plans by NorthRiver Midstream to build a pipeline to fractionators in Alberta will give producers in the Montney more runway for growth.
OPEC+ is ramping up production, WTI is hanging below $65/bbl, and Permian crude oil production growth has slowed to a crawl, raising the question of whether oil output in the U.S.’s #1 shale play might, in fact, be peaking. That’s making some folks on the NGL side of things a little skittish. They’re wondering what a leveling off — or an outright decline — in Permian crude production would mean for associated gas and the volumes of Y-grade being piped to Mont Belvieu and other fractionation hubs. In today’s RBN blog, we discuss a new model that forecasts Permian NGL production under a variety of scenarios.
Since 2011, U.S. natural gas liquids (NGL) production has more than tripled, while domestic demand has grown only modestly. Consequently, the only way NGL markets could balance was a dramatic increase in exports. Today, over 70% of U.S. propane production is exported, with the majority going to overseas markets, while other NGLs see varying export levels: 40% for butanes, 25% for natural gasoline, and 18% for ethane. Although U.S. NGL production growth is slowing, we still project an increase of 1.5 MMb/d over the next decade and a half, with 85% of that growth coming from the Permian Basin. As U.S. ethane and LPG production continues to rise, nearly all the export growth is expected to head to the Asia/Pacific region, with a significant portion going to one country: China. But is this outlook for U.S. NGLs realistic? And do we have adequate infrastructure — ranging from gathering systems to processing plants and fractionators, and from export terminals to the right kind of ships — to handle all of these volumes? In one of his hit tunes, Toby Keith clearly identified the problem for us: “Where You Gonna Go? And What Ya Gonna Do When You Get There?” These are key NGL market themes that we'll be exploring at our upcoming NACON conference on October 24 at the Royal Sonesta Hotel in Houston and that we’ll introduce in today’s RBN blog.
For the past decade, producers in the Permian Basin have been the driving force in domestic production growth, but lately there has been a hard-to-miss slowdown in incremental production rates for crude, gas and natural gas liquids (NGLs). While Permian producers are primarily motivated by crude oil economics, those volumes also come with a lot of associated natural gas and NGLs. These commodities are therefore fundamentally interlinked. So if there’s a hangup with one, the effects will be felt across the upstream and then cascade downstream. There is a lot of money riding on these markets and the impacts of an extended slowdown in the Permian could be monumental, not just in the energy industry but also in the broader U.S. and global economies. In today’s RBN blog, we will examine what’s to blame for plateauing production in the U.S.’s most prolific basin and gauge what its big-picture implications might be.
Way back in 2018-19, U.S. NGL production was rising fast, new ethane-only steam crackers were coming online along the Gulf Coast, and new fractionation capacity wasn’t being added quickly enough — the capacity shortfall sent the NGL market into near-panic. Fast forward to now: NGL production is still rising but domestic demand is flat, resulting in an NGL-exports surge and a race to develop new export capacity. And fractionation capacity in Mont Belvieu and elsewhere? The market learned its lesson five years ago and, to avert another capacity crunch, midstream companies have been adding new fractionators at an almost frenetic pace. In today’s RBN blog, we discuss the ongoing fractionation-capacity buildout — and the need to quickly expand NGL export terminals.
Gulf Coast LPG export capacity is tight again, and it’s going to get worse before it gets better — terminal capacity to load more barrels of propane and butane simply has not kept up with production gains. A number of new LPG dock expansions and greenfield projects are in the works, but they are 18 months or so away. In the meantime, production keeps rising, inventories are high, and it’s very unlikely we will see enough cold weather to balance the propane market. Bottom line: 2024 is shaping up to be a tough year for propane and butane prices. In today’s RBN blog, we examine what has been happening with exports, the looming dock capacity constraints, and the projects that will eventually relieve the imbalance.
Continued growth in Permian crude oil production can’t happen without sufficient infrastructure — not just takeaway capacity for crude, natural gas and NGLs but also the capacity to process the fast-increasing volumes of associated gas being produced in the Midland and Delaware basins. The incremental need for processing capacity is enormous, as evidenced by the ongoing, almost frenetic build-out of gas processing plants across the Permian. More than 1 Bcf/d of new capacity is slated to come online by the end of this year, with another 1.9 Bcf/d in the first half of 2024 and another 1.8 Bcf/d after that. In today’s RBN blog, we discuss the race to add processing plants in key locations in West Texas and southeastern New Mexico and the drivers behind it.
