Natural Gas Liquids Production To Surge Over Next Two Years

With natural gas prices in the cellar, producers are looking to capitalize on higher prices for natural gas liquids, or NGLs.

Research by Houston-based investment bank Simmons & Company finds NGL production is poised to grow by 15% next year and nearly 20% in 2014.

Petrochemical companies see NGLs as a lower-cost feedstock compared to crude oil derivatives. They’re investing billions of dollars in infrastructure to accommodate the new supply. Simmons analyst Mark Reichman says that won’t come soon enough to avoid a glut on the market.

“Ethane is expected to experience the greatest oversupply among purity products, while increased investment in export facilities could provide an outlet for propane supplies. Butanes and pentane-plus products will likely be absorbed in the gasoline pool or be exported, although renewable standards requirements and greater automotive mileage efficiency could provide a headwind.”

Reichman says it could take until 2017 before new infrastructure allows demand for NGLs to catch up with supply.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...