Lowest U.S. ethane prices in years are leading to unprecedented volumes of ethane rejection in the U.S. Rockies and Midcontinent

Monday, July 02, 2012

U.S. Ethane Market Update:

BENTEK’s NGL Supply Report reports ethane prices in Mt. Belvieu, TX, have fallen 65% since January 2012, averaging $0.29 per gallon last week. Ethane prices in Conway, KS, averaged $.05 per gallon last week, the lowest price in more than seven years. As a result of these low prices and the large transportation costs of moving ethane to the U.S. Gulf Coast, ethane rejection is up to 123 Mb/d in the Midcontinent and Rockies regions, with 73 Mb/d occurring in the Rockies. However, the amount of ethane being rejected is having only a minor impact on gas being added into the supply stream. Economics for ethane production in areas closer to Mt. Belvieu, including the Permian, Eagle Ford and Oklahoma/Texas portions of the Anadarko, remain positive at this point.

According to the NGL Supply Report, the Rockies-to-Conway ethane fractionation spread dipped as low as ($3.97)/MMBtu on June 25, which is almost four times below the five-year average. BENTEK predicts ethane fractionation spreads from the Rockies and Midcontinent to Conway will remain negative through this summer, which should alleviate some of the ethane oversupply in the Conway market but will not be enough for prices to recover. Over the next few months, demand for ethane in Mt. Belvieu is expected to increase due to improvements at steam cracker operations and increasing feedstock conversions. However, low propane prices could put a damper on demand from steam crackers.

BENTEK’s NGL Supply Report provides a weekly assessment of U.S. and Canadian raw-mix NGL production, offering the most up-to-date review of raw-mix supply in the marketplace today. This revolutionary new report bridges the three-month production data gap between Energy Information Administration (EIA) data and current activity, tying natural gas production, ethane rejection and PADD-to-PADD flows to NGL production without a time lag.

BENTEK’s NGL Supply Report tracks:

• Daily and weekly U.S. and Canadian raw-mix production by PADD and purity product

• Ethane rejection and fractionation spreads by PADD

• Regional flows and analysis on market dynamics

• Raw-mix storage and fractionation in the U.S. and Canada

• Pipeline projects for raw-mix NGL pipelines in the U.S., including new builds and expansions

• Purity product supply to fractionators in the U.S. by PADD and for Canada


BENTEK’s NGL Market Monitor provides an extensive resource for NGL production, prices and infrastructure in the U.S. This report includes industry highlights, prices, purity product spreads and estimated petrochemical margins for the five major NGLs: ethane, propane, normal butane, isobutane and natural gasoline.

BENTEK’s NGL Databank Suite tracks natural gas processing developments and NGL production in the U.S. and Canada, including detailed information on individual plant throughput.

To learn more, please contact your BENTEK sales representative or call BENTEK Sales at 1-888-251-1264.