The Natural Gas Infrastructure Intelligence team is bringing you a new product: Natural Gas Liquids (NGL) Data! This new database tracks upcoming NGL Pipelines, Fractionators, Gas Processing Plants, Propane De-Hydrogenation (PDH) Plants, Liquefied Petroleum Gas (LPG) Export Facilities, and Ethylene Cracker projects. Genscape aims to provide a framework for a better understanding of NGL infrastructure development, and thus production and market price volatility.
Developed internally to support Genscape's Lower 48 NGLs Production Forecast, this data will now allow subscribers to analyze constraints over time and understand the location and timing of new NGL infrastructure meant to alleviate those same constraints. As oil prices recover from historic lows, IRR on liquids-rich wells will improve, increasing NGL production to fill up existing pipeline and fractionation capacity that has recently come on-line.
The demand for new NGL infrastructure, like that for natural gas, varies widely from region to region. In areas with liquids-rich production growth, NGL processing capacity becomes key – the timing and capacity of each new processing plant added to a region can directly affect NGL recovery potential. With the downturn in oil prices and resulting focus on efficient production practices, midstream companies are working closely with E&P companies to delay new processing facilities until the capacity is necessary to avoid significant constraints.
Although natural gas production has slowed in some areas, new and more efficient NGL processing plant additions are still allowing growth in NGL recovery. New cryogenic processing plants can extract a deeper cut of NGLs from the gas stream than older plants, incenting producers to reroute gas flows from old to new plants upon start-up. Lack of processing plant availability was causing excess gas to be flared and all NGLs to be lost. As new plants come online, flared gas is increasingly recoverable, and existing NGL infrastructure increasingly utilized to move product to fractionation hubs such as Mont Belvieu.
Downstream of production, fractionator capacity has been in a similar situation, where constraints in total fractionator capacity have restricted increases in purity-product output and required additional transportation or storage of y-grade. This has at times limited the availability of ethane, propane, butanes, and natural gasoline at certain locations to feed growth in demand infrastructure such as ethylene crackers, PDH and LPG export facilities. However, as fractionator capacity continues to grow at complexes such as Mont Belvieu, this constraint may be alleviated for periods of time, as is addressed in Genscape’s June Regional Fractionator Balance Report, and fractionator utilization may be limited by available y-grade supply.
As NGL production expectations shift with changes in drilling economics and NGL pricing, detailed knowledge on the location and timing of infrastructure projects to produce, deliver, and consume NGLs will continue to be key to understanding market dynamics.