West Coast NGLs – The Wild West of Natural Gas Liquids Markets

The West Coast natural gas liquids (NGL) market is an island unto itself. Unlike the world east of the Rockies where pipelines link together producing and consuming regions, the West Coast NGL market is marooned except for rail tank cars and a few waterborne cargos.  It is a fiercely independent market with its own unique players playing their own ballgame.  But like the rest of the NGL world, big changes are rippling through that market.  Today we begin a series looking at those changes and how West Coast NGLs are likely to evolve over the next few years.

Overview

When we talk about the West Coast, we mean PADD V. That covers a huge area from Washington to southern California. Unlike other NGL regions, it looks lonely, but it’s far from quiet. The components that make the world go round out west include older gas processing plants with limited fractionation capacity, a few refineries, and one waterborne import /export facility in Washington.  And there are lots of rail tank cars, tank trucks and terminals.  There are few pipelines and those are short, product specifications are “loose”, ethane is unheard of, Conway and Mont Belvieu might as well be on another continent, and the only storage is above ground pressurized bullets and spheres.  On top of that, they live with some of the strictest environmental scrutiny in the nation.

Production/Supply

According to June 2012 data reported by the Energy Information Administration (EIA), the West Coast supplies 4.5 percent of US NGL production or about 144 MB/d out of the US total of 3176 MB/d. West Coast NGL production comes from two sources – natural gas processing (62 MB/d) and refinery production (82 MB/d). There are also limited imports of butane (133 MB/d in June 2012) and propane (26 MB/d in June 2012). The relatively small scale of the market explains why there has never been significant investment in NGL infrastructure such as interstate pipelines and Mont Belvieu-like processing/fractionation facilities. In contrast to the rest of the US where new shale based liquids production is booming, West Coast crude and natural gas production are expected to decline over the next decade. NGL production from both natural gas processing and refining will likely follow suit.

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