EIA: East, Southwest to drive US natural gas plant liquids growth

Click to enlarge. (Image: U.S. Energy Information Administration/Annual Energy Outlook 2019)

Natural gas plant liquids (NGPL) production is forecast to grow 32 percent between 2018 and 2050 to 5.8 million barrels per day (bpd), the U.S. Energy Information Administration (EIA) reports in its Annual Energy Outlook 2019 (AEO2019) Reference case.

Most of the increase in production is in the East, specifically the Appalachian Basin, and the Southwest, specifically the Permian Basin. Given projected crude oil and natural gas prices, producers are expected to focus on liquids-rich plays, and NGPL-to-gas ratios are highest in these areas. In addition, increased petrochemical feedstock demand spurs higher ethane recovery.

NGPLs are light hydrocarbons produced in conjunction with natural gas and recovered at natural gas processing plants. These hydrocarbons include ethane, propane, normal butane, isobutane and natural gasoline. Crude oil refining also yields these hydrocarbons, but in 2017, U.S. refining accounted for about 8 percent of net production, with nearly 92 percent produced at natural gas processing plants, EIA notes.

NGPLs are primarily used as feedstocks in the bulk chemical industry. Ethane is used almost exclusively for producing petrochemicals. About 40 percent of propane is used for petrochemicals, and the remainder is used for heating, grain drying and transportation. About 67 percent of butanes and natural gasoline are used for blending with motor gasoline and fuel ethanol, and the remainder is used for petrochemicals and solvents.

The EIA estimates that shares of NGPL components at the national level will remain relatively stable during the projection period (2018 to 2050), with ethane and propane contributing about 42 percent and 30 percent, respectively, to the total volume. However, shares are expected to change regionally. In the East, for instance, ethane production is forecast to account for about 50 percent of total NGPL production by 2050, compared with less than 40 percent in 2018.

NGPL production is sensitive to changes in market conditions and resource and technology assumptions. AEO2019 includes cases that reflect alternative oil prices and higher or lower resource and technology assumptions.

*Featured image: U.S. Energy Information Administration