Cheap Natural Gas Liquids Fueling Petrochemical Plant Expansion

Prices for natural gas liquids have dropped sharply this year amid growing supplies. But there's a silver lining for Houston.

Production of natural gas liquids — such as ethane, propane, and butane — has surged in recent years. Oil and gas producers have shifted their focus from dry to liquids-rich gas in a bid to boost profits. But the weak recovery and a warm winter have crimped demand.

Marcela Donadio is Americas Oil and Gas Leader for Ernst & Young. She says the low price of NGLs is driving the expansion of Houston-area petrochemical plants

“To the extent that petrochemical companies use NGLs as feedstock, the fact that NGL pricing is lower than it had been, certainly in 2011, represents an economic incentive for them.”

This summer, both Exxon Mobil and Chevron Phillips announced plans to expand their Baytown facilities. Earlier this year, Dow Chemical said it will spend close to $2 billion to build a new ethylene cracker in Freeport.

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...