Record US NGL production in 2017 stemmed from ethane growth – EIA

HOUSTON (ICIS)–US production of natural gas liquids (NGL) has almost doubled since 2010, setting an annual record of 3.7m bbl/day in 2017, driven primarily by ethane production growth, the US Energy Information Administration (EIA) said on Tuesday.

US ethane production for Q1 2018 was 260,000 bbl/day higher than the same time in 2017.

The EIA expects ethane production to increase by another 440,000 bbl/day between Q1 2018 and Q4 2019, according to EIA’s Short-Term Energy Outlook (STEO), which should make up 86% of the growth in NGL production.

The EIA cited shale gas production mostly from the Appalachian region as one of the primary drivers of growth in natural gas production. Associated natural gas, a byproduct of crude oil production, was also cited.

Ethane prices in the US began to decline as compared with natural gas prices in late 2011, the EIA said. Prices began to increase in 2016, following an increase in ethane demand.

US ethane prices surpassed natural gas prices (on a heat-content equivalent basis) in 2016 and 2017, which also caused the ethane share of US NGL production to increase.

US NGL production increased nearly 400,000 bbl/day between 2015 and 2017 on average, with about 175,000 bbl/day of the increase stemming from growth in ethane production.

The EIA noted that several petrochemical plants in the US are expected to come online in 2018 and 2019, which should drive increases in ethane demand and prices.