EIA NGL Workshop Kristen Holmquist
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NGL report
Transcript of EIA NGL Workshop Kristen Holmquist
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The Future of the U.S. NGL Markets
Kristen HolmquistManager, NGL Analytics
Challenges for the Midstream EqualOpportunities for the Downstream
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The difference in lead time between drilling,processing, fractionation and NGL demand is and
will continue to lead to periods of market length ortightness for ethane and propane.
Ethane is balanced to slightly long in U.S. Additional
length will develop between 2014 and 2016 prior tothe start up of new steam crackers
Propane is long in the U.S. Exports out of U.S. willsolve the problem in the medium term. Longer term
issues remain.Exports of butanes and natural gasoline arerequired to keep those markets balanced
Challenges and Opportunities
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NGL Production Increasing, Growth Expected to Continue
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North American Natural Gas Production Getting Richer
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Drilling to Demand Time Lag, Volume Differences
Natural Gas
Drilling
Time toCompletion:3 Months
Volume:1,000 Mcf/d
Cost: $5.0 MM
Natural Gas
Processing
Time toCompletion:18 Months
Volume:200,000 Mcf/d20 Mb/d
Cost: $110 MM
Natural Gas Liquids
Fractionation
Time toCompletion:18 Months
Volume:75 Mb/d NGLs38 Mb/d Ethane
Cost: $260 MM
Ethylene Production
Time toCompletion:36 Months
Feedstock Volume:90 Mb/d Ethane
Cost - $2.0 Billion
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BENPOSIUM 2012 6
U.S. Ethane Petrochemicals Have Kept Up So Far
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BENPOSIUM 2012 7
U.S. Cracker StartUps Rebalance and Even Tighten the
Market
Base Case includes 5new steam crackers
starting up between2017 and 2021
Start up of new units
brings market backinto balance in mid-2017
With five units starting
up, ethane market willbe oversubscribedunless there isfeedstock switching
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The 2011/2012 winterhad 20% fewer cooling
degrees day than thefive year average
Current propane stocksare 45% higher thanaverage (16.7 MMbbl)
Propane Storage inPADD II is 50% higher
than average
Propane Storage inPADD III is 45% higher
than average
Propane Market Length a Major Factor in Price Changes
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BENPOSIUM 2012 9
Rebalancing the U.S. Propane Market
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BENPOSIUM 2012 10
Challenges in the Medium to Long Term Where Will The
Propane Go?
2011 Exports to U.S. = 93 Mb/d 2016 Exports to U.S. = 44 Mb/d
2011 Total Propane Receipts = 92 Mb/d
2016 Total Propane Receipts = 3 Mb/d2020 Total Propane Exports = 38 Mb/d
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BENPOSIUM 2012 11
Canadian Propane Other Demand Required
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BENPOSIUM 2012 12
Butane Markets Exports Also Required to Keep Market
Balanced
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BENPOSIUM 2012 13
Natural Gasoline Markets Exports Also Required
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The difference in lead time between drilling,processing, fractionation and NGL demand is and
will continue to lead to periods of market length ortightness for ethane and propane.
Ethane is balanced to slightly long in U.S. Additional
length will develop between 2014 and 2016 prior tothe start up of new steam crackers
Propane is long in the U.S. Exports out of U.S. willsolve the problem in the medium term. Longer term
issues remain.Exports of butanes and natural gasoline arerequired to keep those markets balanced
Challenges and Opportunities
