Boost in hydrocarbon gas liquids production linked to gas processing plants

Growth in hydrocarbon gas liquids (HGL) production from 2010-15 is linked directly to natural gas processing plants, the U.S. Energy Information Administration (EIA) reports.

Production of these gas liquids, including propane, butane and ethane, increased 42 percent during the period, all from processing plants, EIA says. While gas processing plant production of HGLs gained, refinery output of HGLs declined by 7 percent, the agency adds.

Growth in NGL production has exceeded dry natural gas production growth.

Recovered natural gas liquids (NGL) rose by 58 percent as a result of the increased activity at processing plants – from 2.07 million barrels per day (bpd) in 2010 to 3.27 million bpd in 2015, the agency adds.

EIA says this increase in NGL output was the result of rapid growth in natural gas production. During this period, producers targeted tight gas and shale gas formations likely to yield natural gas with high liquids content. These formations have seen a rapid rise in natural gas production in recent years, the EIA report notes.

NGL production in PADD 4 has grown, even as natural gas output has declined.

Because NGL prices are generally well above the prices of natural gas, producers are incentivized to recover NGLs from the unprocessed natural gas stream. This premium on the recovered NGLs generates additional revenue beyond what is achievable from the sale of unprocessed natural gas at the dry natural gas prices alone, EIA says.

Changes in natural gas production have impacted the entire oil and gas industry – from producers to midstream companies to consuming industries. Stakeholders have responded to the growth by investing in new plants and infrastructure.

These five cases reflect different possible futures for NGL production.

At the same time, the growth in NGL output has outpaced demand, leading to more U.S. capacity to ship propane and butane overseas.
Natural resources and production economics will influence the future NGL production profile (see chart at right), EIA says.