Drillinginfo, a leading energy SaaS and data analytics company, has released a natural gas liquids (NGL) update, the latest in its FundamentalEdge series reports.
According to the report, NGL production is hitting record highs despite fractionation and infrastructure constraints. NGL fractionation facilities process mixed natural gas liquids streams into purity products such as ethane, propane, normal butane, isobutane, and pentane. NGLs are used to make plastics, petrochemical feedstocks, residential, and commercial heating and cooking fuels, polystyrene foam, and in blending with vehicle fuels such as gasoline.
With record-high supply, fractionation margins, and constrained volumes surrounding the NGL market, several midstream companies have posted significant project announcements to take advantage of the market fundamentals. An overview of these announcements is included in the report.
NGL production has hit a record high eight months in a row. Y-grade pipelines, railcars, and fractionators are all next to full. Oversupply and constraints have yielded lower prices, and lower netbacks. There is also increased volatility, which will likely remain at least over the next two to three years as incremental projects are completed and more constraints potentially unfold.