Locator: 45140NGL.
Top ten NGL producers, billion cubic meters, exporting rank:
So, the top five producers:
Data points for the Bakken NGL pipeline:The other pipeline:
- $500 million
- 600-mile pipeline
- capacity to transport 60,000 bpd of unfractionated NGls from the Williston Basin to the Overland Pass Pipeline in northern Colorado
- first NGL pipeline to transport natural gas from the Williston Basin to facilities in the Mid-Continent and the Texas Gulf Coast
- further plans: another $100 million to install additional pump stations to increase capacity to 135,000 bpd from 60,000 bpd as noted in today's press release; this expansion will be completed in 3Q14
| $55.26 | 8/6/2019 | 08/06/2018 | 08/06/2017 | 08/06/2016 | 08/06/2015 |
|---|---|---|---|---|---|
| Active Rigs | 60 | 64 | 58 | 34 | 75 |
Rising U.S. production of NGLs and so-called “purity products” like ethane and propane, as well as growth in steam cracker capacity and NGL and ethylene exports, are giving added importance to NGL and ethylene storage capacity in underground salt caverns along the Gulf Coast. Mont Belvieu, TX, has long been the epicenter of both fractionation and salt-cavern NGL storage — and it will remain so — but there are other areas along the Texas coast with frac capacity and NGL storage, as well as steam crackers and export docks. The questions now are, is there enough in the right locations, and can what’s stored there be received and quickly sent out? Today, we begin a look at existing and planned NGL storage facilities along the Texas coast that are not in Mont Belvieu.
Increased production of crude oil and natural gas in a number of major U.S. shale plays has resulted in higher and higher production of mixed NGLs — also known as y-grade. We have chronicled these gains in a number of RBN blogs, where we noted that in 2019, produced volumes of NGLs (not counting ethane that is “rejected” into natural gas) are approaching 5 MMb/d — roughly double their level back in 2012 — and production is expected to increase by another 1 MMb/d by the mid-2020s.
Natural gas plant liquids (NGPL): Those hydrocarbons in natural gas that are separated as liquids at natural gas processing, fractionating, and cycling plants. Products obtained include ethane, liquefied petroleum gases (propane, normal butane, and isobutane), and natural gasoline. Component products may be fractionated or mixed. Lease condensate and plant condensate are excluded.
Note: Some EIA publications categorize NGPL production as field production, in accordance with definitions used prior to January 2014.
Natural gas plant liquids (NGPL) production: The extraction of gas plant liquids constituents such as ethane, propane, normal butane, isobutane, and natural gasoline, sometimes referred to as extraction loss. Usually reported in barrels or gallons, but may be reported in cubic feet for purposes of comparison with dry natural gas volumes.I do not know if there is a difference between NGL and NGPL (natural gas liquids and natural gas plant liquids). For purposes of this discussion, probably not.
There is more evidence that mayhem is afoot when we look at NGL price relationships. In fact, ethane tells a big part of the story.
Since mid-May 2018, the price of Mont Belvieu ethane has more than doubled, from 25 c/gal to 55 c/gal on Friday (September 14). All measures of ethane value that we monitor here at RBN are back to levels not seen since 2012.
Ethane is now three times the price of natural gas on a per-Btu basis. The last time we saw that was May 2, 2012. The ethane price is up to 34% of West Texas Intermediate (WTI) crude oil. Last year at this time, it was 20%. The frac spread, where ethane is a big component, is up to $8/MMBtu, the highest level since crude prices crashed in 2014.
Two things are driving this dizzying ascent of ethane prices.
First is increasing ethane demand from all the new U.S. ethane-only crackers coming online plus growing ethane exports. The second factor is the focus of this blog: the fractionation capacity constraint. Maxed-out fractionation capacity caps ethane production.
Ethane can’t be delivered to petchem plants or export docks until it has been fractionated. But not only does fractionation capacity cap ethane production, there is a more nefarious process at work. Even though ethane prices are now three times natural gas prices, ethane rejection (the sale of ethane as natural gas) is on the rise.
That is because processors are rejecting ethane to make room for the fractionation of propane and the heavier NGLs.
There are all sorts of quirks that happen when rejection is driven by fractionation capacity constraints instead of natural gas-versus-ethane value economics, not the least of which is that lowering the ethane content of incoming y-grade actually reduces the effective capacity of the fractionator (more on that math in an upcoming blog). But regardless of the math, the net result is lower ethane supply just when ethane demand is cranking up. No surprise that ethane prices are skyrocketing.Talk about a conundrum. The price of ethane is going up. But North Dakota doesn't have the infrastructure to process all of the ethane it is producing. And even if North Dakota had the necessary infrastructure it sounds like the US doesn't have the necessary capacity to handle all of it.
So what happens if production continues to outpace fractionation capacity? Presumably, at some point, there is no more storage capacity for y-grade. How about exporting the surplus? That’s what happens with purity products like ethane and propane. While theoretically possible, exports of y-grade are extremely problematic — there are no appropriately configured docks or ships. Consequently, if storage is full, production must be curtailed. But here’s the catch: Y-grade gets produced as a byproduct along with associated and “wet” gas production. The only way to dial down y-grade production is to dial down the production of associated gas (which means pulling back on crude oil production), or to reduce wet gas production — or both. That would be an unprecedented market development.
To put some context to supply/shortage/US NGL potential ... feedstock supply is dwindling on the global stage.
Right now, in the US, oversupply of ethane is resulting in about 600,000 barrels a day rejected back into the pipelines.
That is, due to the current infrastructure shortage, ethane that could supply 6 large crackers is simply being burned along with methane.
The US has a HUGE advantage on the world stage with rock bottom, ample supply of feedstocks along with cheap electricity to run the operations.See Houston Chronicle link at this post.
In 2016, the Vermont state Legislature was given an independent report that revealed Vermont’s electric customers actually buy zero percent of the wind energy and just 0.4 percent of photovoltaic solar energy produced in the state. Moreover, the report found, “the state’s electric sector greenhouse gas emissions had doubled over a historic 10-year period.” And they pay more for their electricity.Texas, the "wind" state? It was my understanding based on news stories that wind energy was increasing exponentially. In fact, in the past year or so, consumption of natural gas has increased significantly, taking the place of coal, and the percentage of wind energy consumed against all types of energy has actually dropped a bit:
| $61.39→ | 3/16/2018 | 03/16/2017 | 03/16/2016 | 03/16/2015 | 03/16/2014 |
|---|---|---|---|---|---|
| Active Rigs | 57 | 47 | 31 | 111 | 190 |
With U.S. NGL production hitting a record high of just over 4.0 MMb/d in the fourth quarter of 2017 and ethane production also reaching record volumes at 1.6 MMb/d, the price for ethane has remained stuck at about 25 c/gal — where it’s been for the past two years, even though prices for other NGLs are up over the same period.
The combination of roaring high-ethane-content Permian and SCOOP/STACK NGL volumes, coupled with steam cracker outages and construction delays due to Hurricane Harvey, have landed us here. So where do we expect the ethane market to go now as incremental cracker and export demand ramp up in 2018 and 2019? Today, we continue a series on our updated NGL market forecast, highlighting the NGL product whose market is going through the most changes: ethane.LNG buyers not taking advantage of buyer's market, Reuters:
Royal Dutch Shell, the world's biggest liquefied natural gas (LNG) trader, said on Thursday buyers of the fuel have not taken advantage of a market that favours them and have failed to extract better supply deals.
Steve Hill, executive vice president at Shell Energy, said this failure was damaging to all market participants as it prevented new supply from being developed.
"It's quite interesting in that you could argue that buyers haven't necessarily taken advantage of the buyer's market because buyers haven't done very many long-term deals," he told an industry seminar in Tokyo.
"I think what is our concern is that if deals aren't done and projects aren't sanctioned, eventually it won't be a buyers' market anymore because demand will grow and supply won't.
Hill said that a traditional model of switching back and forth between the buyer's market and the seller's market would not be helpful either way because that would lead to demand destruction in addition to projects not being developed on a regular schedule.
Independent refiner Andeavor said on Friday it plans to run its 10 U.S. refineries up to 96 percent of their combined capacity of 1.1 million barrels per day (bpd) in the first quarter of 2018.
The company also said during a conference call with Wall Street analysts that its refineries ran at 97 percent of their combined crude oil throughput capacity in the fourth quarter of 2017. For all of 2017, the refineries operated at 95 percent of combined throughput.
The company has a heavy overhaul schedule for 2018; in the final stages of completing a turnaround at Los Angeles that was started some time ago; doing a turnaroudn at Martinez.
Andeavor is integrating refineries into a single plant in Carson and Wilmington, California, adjacent industrial suburbs of Los Angeles
The 269,200 bpd Carson refinery and the 94,900 bpd Wilmington refinery adjoin each other.
North Dakota NGL Logistics Hub. Andeavor Logistics today (February 16, 2018) announced its intent to build and operate the North Dakota Logistics Hub to further participate in the natural gas liquids (NGL) value chain and provide logistics solutions for increasing Bakken NGL production.
The project will convert a segment of the Andeavor Bakkenlink crude oil pipeline into NGL service to enable the movement of mixed NGLs from a new third-party gas processing facility in central McKenzie County, North Dakota to a newly expanded fractionation complex at the Andeavor Logistics Belfield processing facility. [Comment: there's a lot packed into that once sentence.]
From the fractionation complex, products will be shipped to the nearby Andeavor Fryburg rail terminal for manifest and unit train rail movements and will be consumed within Andeavor's refineries as well as marketed, including international markets, by Andeavor.
Project volumes are supported by a long-term gas processing facility dedication and minimum volume commitment. The estimated capital investment is expected to be $140 to $150 million and partial commercial operations are estimated to begin in late 2018, with full operations commencing in the first quarter of 2019.
The project is expected to deliver annual net earnings of $15 to $19 million and $22 to $26 million of annual EBITDA, representing a 6 to 7 times multiple.Andeavor was previously known at Tesoro, a company based in San Antonio, TX. I'm having trouble getting used to the name change.
58. Oil is generally "measured" in barrels (bbls). Is the volume of natural gas liquid (NGL) ("wet" natural gas) also expressed in bbls? No, NGLs are generally expressed in gallons, according to a comment sent in by a chemical engineer. Incidentally, some think the "additional" "b" comes from "blue barrels." From RBN Energy:
There’s one more aspect of NGL markets that must have been designed to confuse outsiders, because it certainly does. NGL quantities are quoted in barrels. NGL prices are quoted in gallons. Really. So I’ll sell you 10,000 barrels of non-TET normal butane for $1.36 per gallon. It never occurs to NGL people to convert either the quantity to gallons or the price to a per barrel number. They think of everything multiplied by or divided by 42. Go figure. And BTW, propane retail people do think in gallons - but that’s another story.
The DOE just released a 45-page pdf, "Natural Gas Liquids Primer".One can access the natural gas liquids primer here. Click on this link. Embedded on that page is a link to an introduction to the primer. Click on that and then in the bottom left hand corner is a PDF that can be downloaded. Let's see if "copy and paste" works:
It is a fantastic piece that introduces the reader to what NGLs are and why they are important. Goes on to describe present and future Appalachian Basin resources, infrastructure, and potential.
Absolutely amazingly informative report that is best studied and retained for future reference. Just as the steel industry provided raw manufacturing material, buttressed by coal to generate cheap, abundant electricity, NGLs will provide cheap feedstock for manufacturing while the dry methane component will fuel - via CCGTs - the cheapest electricity anywhere.
Decades of upside potential in the Appalachian Basin region as well described in the DOE report.
Supporters of a proposed massive infrastructure project in Appalachia say that it would provide a strong impetus for growth in the region's petrochemicals sector.The 21st century: The American Energy century.
"The Appalachian Storage Hub is needed to take full advantage of chemical and plastic raw materials found in the Marcellus, Utica and Rogersville shales," Kevin DiGregorio, executive director of the economic development non-profit Chemical Alliance Zone, Inc. (CAZ), said of the proposed $10 billion natural gas transmission and storage project that would provide regional access to natural gas liquids (NGL) from shale plays in West Virginia, Ohio, Pennsylvania and Kentucky.
The storage and distribution system would comprise underground storage facilities for ethane – and possibly other NGL such as propane and butane – as well as pipelines to move ethane and other raw materials to cracker and other manufacturing facilities, DiGregorio explained. "The proposed 'six-pack' pipeline system would transport methane, ethane, ethylene, propane, propylene and chlorine to manufacturing facilities throughout the region," he said.
NGL likely would be stored in depleted natural gas fields, depleted salt domes or other natural underground caverns, noted DiGregorio. Exactly where the hub would be located remains undetermined, but experts reportedly are exploring candidate sites.
Geology researchers from universities in West Virginia and Ohio are compiling a list of the top three to five potential locations in the quad-state region based on various technical criteria.
Much of Appalachia's existing chemical and plastic manufacturing capacity straddles the corridors of the Ohio River and its main tributaries. New capital projects – particularly Shell's ethane cracker near Pittsburgh and PTTGC America's proposed ethane cracker in Belmont County, Ohio – would also enjoy easy river access to facilitate transport of raw materials, products and equipment. The benefits of having a multibillion-dollar storage hub would extend well beyond the locality and state hosting it.
"With the accomplishment of the built-for-purpose Appalachian Storage Hub, the citizens of all four states stand to gain in a similar way," he predicted. "The petrochemical industry, and innovation engines associated with it, will grow with the availability of critical raw materials and intermediates delivered in a safe and environmentally sound manner."
Y-grade pipelines have in-line analyzers and flow meters that continuously measure both and density. A quality assurance (QA) system is in place so that accuracy is ensured.
The Vantage pipeline to Alberta from the Hess plant is probably the longest ethane pipeline in North America. OneOK y-grade pipe line takes Bakken NGLs to Conway, Kansas, where the propane is fractionated and sent to north to Iowa and points north. The rest of the NGLs are sent to Mt Belvieu, TX, where the rest of the fractionations occur.
Some shippers have started to use tankers to take ethane to Asia and Europe. Bakken ethane is left with the methane, as OneOK doesn't find it profitable to transport it to Conway and then to Texas. Bakken ethane may have billions of dollars in economic potential for ND if a cracker is ever built.Later, 4:00 p.m. CDT: a reader is wondering how y-grade is transported to the fractionator since different components have different monetary value. Hopefully a reader will provide more insight. My hunch is that there is a "black box" at the pad that measures the percentage makeup of the NGL. But I really don't know. Way beyond my expertise. But it's a great question. Wiki comes close to answering the question, but not quite (unless I missed it, which is possible). It's very possible, the value of the y-grade (and its components) is determined "after the fact," after it has been processed at the natural gas processing plant.
Houston-based Enterprise Products Partners LP will build its ninth natural gas liquid fractionator at its complex in Mont Belvieu that is just east of Houston.
The massive pipeline company is increasingly busy in the Houston region, already building the world's largest ethane export facility at the Houston Ship Channel, and also just completing this week the the first segment of the Aegis ethane pipeline between Mont Belvieu and Beaumont.
Enterprise's fractionators are used to separate ethane and NGLs like butane and propane from the natural gas, or methane. This ninth fractionator will have a capacity of 85,000 barrels a day and is expected to begin operations as early as January 2016, according to Enterprise.
Enterprise also said it has secured the required permits and emission credits for a similarly sized 10th NGL fractionator at the same complex. Upon completion of the ninth fractionator, Enterprise will have gross NGL fractionation capacity of 755,000 barrels a day at Mont Belvieu and total gross NGL fractionation capacity of approximately 1.2 million barrels daily. Enterprise will have 265,000 barrels a day of propane production capability at Mont Belvieu upon the completion of the ninth fractionator.I would assume RBN Energy has discussed these developments; I can't recall everything RBN Energy has touched on but they have discussed the activity in the Houston and the Houston Ship Channel on many occasions and in great detail. A search of "Houston Ship Channel will bring you to several posts of all the activity going on there.
Let’s start at the beginning – before the NGL products become NGL products.
The majority of US natural gas liquids (NGLs) reach fractionation centers such as Mont Belvieu in the form of semi-processed y-grade. Traders do not trade y-grade and there is no posted price for it. All you can do with y-grade is fractionate it into purity products.
The value of y-grade is all in the purity products. So when you talk NGL trading, you are talking trading of the individual NGL products.
Recall that once fractionated, y-grade becomes five unique purity products; ethane, propane, normal butane, isobutane and natural gasoline. Unlike y-grade, each of these products has a specific market value and they are traded each day. A lot. The majority of those trades occur at market hubs where there is a critical mass of infrastructure – with the two biggest being Mont Belvieu, TX and Conway, KS.
Purity products are traded both physically (transfer from seller to buyer at a point within the physical trade location) and financially (via derivative transactions where the parties settle up against an index price, usually OPIS).NGL fundamentals can also be found here.
Currently [the price of US natural gas] is hovering at about $4.50. Extracting the layers, or molecules, can become complex and specific quite quickly, but the overall concept is something the average person can grasp.
"You don't need to review your chemistry to understand it, but, the way to think about it is in a cubic-foot of natural gas produced in the Williston Basin you will find somewhere around 8-12 gallons of raw natural gas liquids," John Gibson, former CEO, ONEOK and non-executive chairman of the Board, ONEOK Partners said. "That's ethane, propane, butanes all mixed up. If you go down into Oklahoma or the Texas in the pan handle, that same cubic foot will have say, three gallons per MCF. As you can tell by the numbers there is a whole lot of natural gas liquids in the Williston Basin."
Reports from the Energy Information Agency reinforce Gibson's testimony that Bakken offers some of the richest NGLs in the country. Breaking down the NGL market even further, each well drilled contains a great deal of ethane, propane, butane and natural gasoline, which can be stripped out, fractionated and put into the gas pipeline network. This process is not necessarily new in oil and gas, but is relatively new to North Dakota.
"With respects to the Marcellus and other shale plays that are offshore, the NGL technologies are proven but the locations are new," Don Bari, Vice President, Technology and Analytics Groups, IHS Chemical, said. "All the infrastructure is already set up in the Gulf so that has had an early influence."
With crude production from the Bakken expected to grow for over a decade, associated gas output should also rise to much higher levels, possibly as high as 2.5 Bcfe/d of raw gas at the wellhead. This would position the Bakken as a very significant source of NGL supply in North America and will create a continued growth opportunity for Midstream infrastructure providers focused on the Bakken.This, perhaps, is the most important part of the linked article:
Not all E&P operators will benefit equally from the processing infrastructure build-out. Given that the Williston Basin remains gas infrastructure short, some operators may find themselves without processing agreements and will have to wait until sufficient capacity is finally available. Production volume and acreage/well concentration are particularly important to an operator's ability to secure gathering & processing agreements on reasonable terms.
The distribution of economic benefit is another important issue. Operators who control processing and gathering infrastructure will obviously be in a better position to receive the highest value for their product. Hess Corp. and Whiting Petroleum are two examples of large operators taking significant control of infrastructure development in their operating areas. Hess' midstream solution is the most comprehensive and integrated: it includes a large-scale processing and fractionation facility, a dedicated ethane pipeline (Vantage pipeline), and an anchor shipper position on a new lateral interconnection to an interstate gas pipeline.But, good news, short term:
In summary, gas takeaway capacity from the Williston Basin does not appear to have structural constraints, at least in the near term, and all the volumes produced by processing plants should find transportation solutions, regional or interstate. While Bakken gas may trade at a Canadian-type differential to Nymex, the basis should stay reasonably narrow (by the historical standards for AECO basis).But there is much more to the pipeline story, longer term. Go to the link for more. Be sure to read "Oil Finder"'s comment near the bottom of the comments. He highlights one of the problems publicly traded companies have with quarterly need to please investors.
A natural gas liquids boom stemming from development of US shale plays will spur investments in export-related petrochemical plans targeting Latin American market, Energy Security Analysis Inc. (ESAI) said in a recent report.The Bakken was not mentioned, but the Bakken is also contributing.
With US demand for ethylene derivatives growing modestly, expanding petrochemical capacity will be export-oriented. ESAI expects the US surplus of ethylene derivatives to expand to over 4 million tonnes/year by 2016, a 40% increase from 2011.
In response to increased liquids production from Marcellus and Utica shales in Pennsylvania and Ohio, Royal Dutch Shell selected a site near Pittsburgh for the potential construction of a petrochemical complex.
Deep cut: the processes which recover NGLs from natural gas in excess of amounts required for sales gas to meet pipeline specificationsA technical paper that seems fairly easy to read is here: http://digitalcommons.mcmaster.ca/esr/vol9/iss1/4/ : at the link, click on the title of the article and it will take you to a PDF
According to Emma Meade, Hess Corporation Communications in Houston, Texas, the current capacity of the Tioga plant is 115 million standard cubic feet per day. That equates to 260,000 gallons daily. Of that amount, 50 percent is propane, 25 percent butane and 25 percent natural gasoline. When the expansion goes on-line the processing capacity will increase to 250 million standard cubic feet per day.
The expansion is not scheduled for completion until sometime in 2013. When finished, the amount of liquids processed will increase from 260,000 gallons daily to 2.5 million gallons per day. Meade said the breakdown will be 50 percent ethane, 30 percent propane, 15 percent butane and five percent natural gasoline.
