the study estimates NGL supply of
2.56 million b/d (7%, or 163,000 b/d)
in 2013 and 2.89 million b/d (13%, or
333,000 b/d) in 2014. The study sees
ethane in oversupply through 2016.
In 2012, it said, US gas plants produced on average 971,000 b/d of ethane. Potential ethane supply growth
will substantially exceed the roughly
137,000 b/d of ethane demand growth
by way of conversions, restarts, and
expansions planned for 2013-15. The
result will be ethane rejection of about
200,000 b/d in 2013, 449,000 b/d in
2014, and 545,000 b/d in 2015.
Incremental ethane supply is not
fully absorbed by ethane demand, says
the study, until new greenfield ethylene crackers begin operating in 2017.
Seven such petrochemical plants with
in-service dates of 2017 could consume 520,000 b/d, leading to a more
balanced ethane market—assuming
all projects are completed.
C3+ and exports
In 2012, US gas plant production of
propane averaged 709,000 b/d, says
the study, with total supply averaging
1.4 million b/d, including refinery production and imports. Simmons’ models show growth of almost 100,000 b/d
in 2013 and 169,000 b/d in 2014.
Propane supply growth is closely
matched, they show, with increased
LPG export capacity additions of
95,000 b/d in 2013, 127,000 b/d in
2014, and 50,000 b/d in early 2015.
Planned propylene dehydrogenation
could increase propane demand by
168,000 b/d by 2015-16.
While Simmons expects healthy
butane supply growth in 2013-14, it
believes LPG export terminals mentioned previously will have sufficient
capacity to export propane and butanes, potentially shifting both propane and butane markets to better balance by late 2014 or 2015.
A new study of US NGL markets from
Simmons & Co. International, Houston, sees ethane remaining in oversupply near term and export growth
bringing balance to propane and butane markets.
The combination of strong oil prices, robust drilling backlogs of unconventional plays in such areas as the
Eagle Ford, Bakken, and Permian and
in liquids-rich Marcellus and Utica,
and new midstream and downstream
infrastructure will increase NGL supply 2013-14.
Natural gas processing capacity will
increase by 5. 6 bcfd ( 6.9%) in 2013 and
an additional 2. 8 bcfd ( 3.2%) in 2014,
says the study, “providing a growing
stream of blended NGLs.”
New NGL pipeline capacity will
also increase by 2-2. 5 million b/d dur-
ing 2013-15, with almost 60% of this
capacity delivering to Mont Belvieu
fractionation. In addition, 1.4 million
b/d (54% total increase in US capac-
ity) of fractionation capacity will come
online 2012-15, 66% of which at Mont
In 2012, gas plant NGL production
averaged 2. 4 million b/d, up 8% or
184,000 b/d over 2011. Simmons estimates that potential NGL production
could rise to 2.76 million b/d (15%, or
363,000 b/d) in 2013 and to 3. 34 million b/d (21%, or 581,000 b/d) in 2014,
assuming sufficient demand for all purity products.
The ethane market will be oversupplied, however, resulting in ethane rejection at many US gas plants, says the
study. Leading natural gas processors
have estimated that 200,000-250,000
b/d of ethane is currently being rejected. Simmons believes ethane rejection
potential could exceed 400,000 b/d in
A bipartisan energy
snowball rolls again
in the US Senate
by Bob Tippee, Editor
Another time Congress resorted to bipartisanship to make energy law, the US recommitted itself to fuel selection by politics
instead of markets and created problems
now becoming crises.
Yet bipartisan energy legislation is
back, growing like a strudel as lawmakers
roll in layers of goodies—some of them, as
before, actually good.
The earlier triumph was the Energy
Policy Act of 2005, which set mandates
for biofuels and distributed tax breaks of
varying generosity to politically favored energy forms. Oil and gas received incentives
for natural gas produced from deep wells
in the Gulf of Mexico.
Generally, EPACT reestablished energy
policy-making by command, control, and
political handout. Two years after passing
it, Congress expanded the biofuel mandates to proportions and complexity now
proving costly and impossible to meet.
The new bipartisan effort began as a
simple energy-efficiency initiative. But
bipartisan energy is never simple.
The basic Senate bill would authorize
spending of $350 million over 5 years on
energy-efficiency programs by the government and industry.
It has attracted amendments expressing support of the Keystone XL pipeline
border crossing, trimming the Environmental Protection Agency’s carbon-emission
standards for electric power plants, delaying implementation of ObamaCare, and
requiring high-level government officials to
use ObamaCare health exchanges.
Individually, each amendment has
merit. But what does ObamaCare have to
do with energy?
Yes, the Senate works this way. With
energy, though, the snowballing tendency
of Senate legislation too often comes to
grief. The conservative amendments won’t
survive in a Senate controlled by Democrats. But they might doom the basic bill.
That outcome would be regrettable. The
question is worth asking why the government should spend money on energy-use
efficiency, which improves steadily on its
own. But $70 million/year is small change,
and the programs aren’t egregious.
If the Senate passed the bill in its
mostly innocuous original form, it could
claim to have acted on energy and move
on—perhaps to fixing problems originating
in the bipartisan energy beast it passed 8
Study: Glut of US ethane to remain;
exports to balance propane, butane