Saturday, May 15, 2021

Bakken Gas Quality Constraints To Impact Ethane Pricing -- Source -- May 15, 2021

This article was published February 11, 2020, over at BTU Analytics

A reader sent it to me overnight.

This article led me down a rabbit hole that kept me up most of the night. If I didn't have family commitments I would post the links that helped me understand this article. I will do that later, and, as usual, with comments. 

By the way, two things:

  • I do not understand natural gas; and,
  • this whole subject has been discussed numerous times and in depth on the blog.

Most of the really good stuff has come from RBN Energy.

Links that will be addressed later:


  1. Ethane used to be a bit like butane. Price was correlated to oil price (competes as a petrochemical feedstock). However, this has changed and now it correlates to natural gas price (which no longer tracks with oil either). This is because the major use of ethane now is "rejection" into natural gas, to the extent possible. There have been articles explaining this for several years, not a new phenomenon.

    Of course, also location matters. In OK, you are near petrochem. In the App or ND or Canada, not so much. And lack of transport can drop the prices strongly. In ND case, flaring often would be cheaper than processing. Or letting the processing sites flare methane/ethane and strip out the more valuable (and transportable) NGLs.

    1. Lots of interest in this subject which I don't talk much about. I look forward to completing this blog in a week or so, but for now, readers are providing the background information. Much appreciated.

  2. It pains me when I see even oil execs not knowing something so basic as what NGLs are. And the popular press and peak oil nitwits are even worse. Talk about stuff and don't understand it. If you follow this sector for years, you need to learn/understand it.

    1. First important characteristic of oil and gas is that it is a natural product. This is very different than chemistry where you think of a single molecule. Here we have a soup of different molecules. Thousands of different ones. And different deposits have different mixtures. And many of the fuels also are mixtures still (e.g. gasoline). VERY different than an element or a molecule, something you have pure and in a little Sigma Aldrich bottle to do reactions with. These are MIXTURES.

    2. Creating this mixture tendency are two phenomenon: first the incredible complexity of organic compounds. Carbon has four bonds and forms stable molecules with many carbons. You can have different length chains, branches, rings, double/triple bonds, etc. And can have heteroatoms (non-C or non-H, e.g. S).

    Secondly, organic molecules are (in general) very soluble in each other. You know oil and water? They don't mix. But different oils DO mix. And even natural gas (methane, one carbon) dissolves to a decent amount in even very heavy oils like tar sand.

    Of course, the exact shape (branches and the like) matters. But for very simple assessment, you can think of the number of carbons as determining the properties of the molecules. C-1 (one carbon) is the simplest form and is "pure" natural gas. It has a very low boiling point (requires incredibly cold temps to liquefy into LNG, e.g.) Gasoline is around C-8. It's actually a mixture and branching is important, but for very gross oversimplification, think of it as octane. It has a relatively low boiling point (thus the vapors you can see). Diesel is less volatile (has a higher boiling point). Think of it as C-16. It's actually a mixture and straight(er) chains are important, but think of it as C-16. Heavy fuel oil is even more carbons and higher boiling.

    [The different fuels are made by distilling to separate the mixtures in crude oil, thus "distillation towers". It's actually more complex than that with some cleanup, and molecule fiddling (cracking and the like). But for gross simplicity, think of basically taking the oil and distilling it into different "cuts" of hydrocarbon length.

  3. 3. Oil and gas are produced together (in most cases) along with water. An oil well (or a wet gas well) is really an oil/gas/water well. At the well-head, there is a "three phase separator" that gives vapor (top), oil (middle) and water (bottom). This is basically just done by mechanical separation, like in your salad dressing bottle. Can Google for Youtube videos of the mechanism--they are cool looking with some mechanical tricks to allow the separation at decent flow rates. But for simplicity, can think of it as a wide spot in the pipe allowing settling separation.

    A gas well typically has a little bit of associated oil. And visa versa. And can even be sort of same amounts of each. In a few cases ("dry gas"), you may have insignificant oil. And even rarer, you may have "dead oil" that has no appreciable gas. But usually you are getting BOTH together. (Along with some useless water.)

    From, the 3-phase sep, you get three streams, the first twof which are commercial:

    a. The vapor ("wet gas") is mostly C-1, but has appreciable amounts of C-2 to C4, and a little bit of C-5+.

    b. The liquid oil is called "crude" or "lease condensate". There is no fundamental chemical difference (like with elements) between crude and lease condensate. The are the same junk, different flavors. In many states (ND, for instance), there is no tax or regulatory difference. And the Feds treat them the same also. A few states (OK, TX) differentiate crude (from mostly-oil wells) and lease condensate (from mostly-gas wells) for tax purposes. And the lease condensate tends to be lower density (higher API gravity). But it is purely a matter of degree. No fundamental difference. The peak oil morons get this messed up all the time.

    c. The water is just salt water from the deep earth. Very high salinity and can contain some radioactivity or the like. Honest, it's not that awful. I think deep ocean disposal would hurt nothing because of the dilution. But you ain't allowed to put it in streams or the ocean any more. Have to clean it up or inject it back into the deep earth. Usually the latter.

  4. 4. The numbers you see reported for oil and gas production (on the EIA 914 or the NDIC) are C&C (crude and lease condensate) and well-head gas. I.e. they are the amounts produced FROM the 3 phase separators at well pads.

    After the well-pad, the C&C goes to refineries where it is (basically) separated into different boiling fractions: light ends (even including a little more natural gas, along with ethane, propane), naphtha, gasoline, diesel, kerosene, heavy fuel oil, and even asphalt. You can think of this as a much more complex, expensive, "second separation" of the liquid petroleum stream from the three-phase sep. High temps are used to drive the separation.

    The natural gas from the 3-phase separators also gets a "second squeeze" in centralized, expensive plants, away from the well head. In this case, cold temps are used to separate components. The C-1 (methane) is natural gas. All the other components of the "wet" gas stream are called NGLs (natural gas liquids). Paradoxically most of them are NOT liquid at room temp. But they are still liquid at higher temps than methane.

    Ethane, C-2, is separated and used for petrochem (mostly). But in some cases, it is fed back into the natural gas stream when the heat limits allow, if price of petrochem is not good enough. C-3, propane, also has petrochem uses, but is mostly for space heating where natural gas is not available (think of it as transportable natural gas, can use much flimsier cylinders because of it's higher boiling point.

    C-4, butane is right at the boundary of boiling. On a cold winter day, it is all liquid. But at room temp, it is a vapor. Can also be stored in flimsier tanks. Your plastic Bic lighter has butane in it...the slight pressure keeps it liquid, but as it comes out it evaporates). Because of the temperature, butane is seasonal. In the winter, it (mostly) gets mixed into gasoline. In the summer, it can't be mixed into gasoline. Also has some petrochem uses, but in many cases, people just store it in summer and sell it in winter.

    There are two isomers of butane. The straight chain is used as above. The branched butane is actually sold to refineries as a starting material for making higher octane branched compounds. The branched isomer sells for more, so there is enough incentive to separate the two isomers and sell them separately.

    The higher carbon molecules in the gas stream are called "pentanes plus". Since, well, they are C-5 mostly and a small amount of C-6, etc. These molecules ARE LIQUID at room temp. In the wet gas stream, they are a vapor. But the gas processing plant separates them out and collects them as a liquid phase.

    C-5+ is sort of oil like. Is (confusingly) called "plant condensate" or "drip gas". But we are talking MUCH higher API gravity (say 90 or so) than wellhead lease condensates (that are in the high 40s-50s or so). However, plant condensates ARE real liquid hydrocarbons--the only NGLs that are room temp liquids.

    There is no economic incentive to separate the (three) different isomers of C-5 or the C-6 (and its isomers). Basically pentanes plus is sold as a mixture. The primary application is to just get thrown into an oil refinery (mixed with heavier crude). But it can also be used for gasoline mixing, for diluting tar sands, petrochem, etc.

  5. In general, the gas stream components are more valuable as they get longer. But this depends on the exact supply/demand, transport availability and processing costs. But in general: C-1 is cheapest; C-2 is pricier; C-3 next pricier; normal butane even better; isobutane better than that; and pentanes plus best (close to WTI, maybe a ten buck haircut).

    Again, it pains me that people (peak oilers, grrr) follow this stuff and opine on it for years. And don't even learn the first thing about what they are talking about. Not asking for detailed chem engineering and distillation curves. But just basic f... concepts. RBN has explained this several times. And there are many other sources a Google search away. But I still see people who don't know the basic lay of the land.

  6. Pipeline gas should be maximum 1100 BTU/cuft. Methane is about 1000 BTU/cuft, ethane is about 1700 BTU/cuft. Natural gas mix of 88% methane 12% ethane will be about 1100 BTU/cuft. If to much ethane in the NG will burn hotter causing problems for end users.

    Since ethane is stranded by high transportation costs vs. low value in Bakken area, this is why there is a electric power plant being built in Bakken area designed to burn ethane