Natural gas processing plants are being built or expanded at a feverish pace. At least 90 projects are in the works around the U.S., expected to add more than 15 Bcf/d of capacity according to the latest Bentek NGL Facilities Databank numbers. How do the economics of these investments work? We know that it is a lot more complicated than a simple frac spread. But does that mean the calculations must be exclusively the purview of engineers armed with gas plant optimization models? Heck no. Anybody, even an MBA with a spreadsheet, a few standard factors and a gas analysis can figure out how a gas processing plant makes money. So to prove that point today we’ll dive one more time into natural gas processing economics to understand how the composition of an inlet gas stream is converted to outlet streams of natural gas liquids and residue gas.
Yesterday the price of ethane in E/P mix in Conway dropped again, now down to 14.5 cnts/gal, or $6.09/Bbl. A lot of the ethane barrels that move down the ONEOK Overland Pass NGL pipeline from Opal, WY to Conway, KS get priced out based on Conway ethane numbers. We talked about this situation last Wednesday in Not Gonna Lie.
This is Part V of a series on the Golden Age of Natural Gas Processors. The first four parts reviewed the crude-to-gas ratio at 50X, the impact of increasing NGL production on prices, the uplift value provided by gas processing, and who gets all the money. Today we examine the incredible magnitude of gas processor’s margins – if the processor has access to the right gas streams.