US spot prices for NGLs decrease in 2012 year on year

15 January 2013 23:03  [Source: ICIS news]

HOUSTON (ICIS)--US spot prices for natural gas liquids (NGLs) in 2012 were well below prices in 2011, the US Energy Information Administration (EIA) said on Tuesday.

Spot prices for ethane and propane declined the most of the NGLs, but normal butane, isobutane and natural gasoline fell as well. Ethane and propane’s precipitous drop was due to elevated production levels and the warm winter of 2011, the EIA reported.

“Both production and stocks of ethane and propane were high, depressing prices and causing an increasing amount of ethane to be rejected,” the EIA said. “Ethane rejection is a phenomenon whereby ethane is left in the natural gas stream, so long as the heat content of the gas does not exceed the regulated limits. It occurs when the price of ethane is low relative to natural gas, or when the cost of removing ethane is high relative to its price.”

The EIA said ethane prices in 2012 were down 48% on average compared with prices in 2011. The percentage is in line with the average ICIS-assessed spot prices for ethane in 2011 and 2012.

The average spot price for ethane in 2012 was 39.93 cents/gal. In 2011, it was 77.19 cents/gal, according to ICIS.

The EIA said propane spot prices in 2012 were 32% below 2011 prices, nearly the same percentage as the ICIS-assessed average spot prices for propane in 2011 and 2012.

The average spot price for propane in 2012 was 100.31 cents/gal, which is about 31% lower than 2011, when it was 146.41 cents/gal.

Annual average spot prices for normal butane, isobutane and natural gasoline were down relative to 2011 by 5%, 12% and 7%, respectively, the EIA said.

According to ICIS Pricing, spot prices for normal butane and isobutane were down 10% and 11%, respectively. ICIS did not assess the price for natural gasoline until 2012.

Normal butane, isobutane and natural gasoline have maintained higher price levels than ethane or propane due to their use as gasoline blendstock and their competition with crude oil and crude derivatives, which leads to those NGLs being priced in relation to crude oil, the EIA said.

By: Bobbie Clark
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