How to Predict Price of NGLs – The Spread Between Oil & NatGas
Here’s a little known factoid that will be useful for anyone wondering what the price of NGLs (natural gas liquids) will bring in a given market at a given time. The U.S. Energy Information Administration (EIA), our favorite government agency, points out NGLs almost always fetch prices that are “range-bound” between the price of oil on the high end, and the price of natural gas on the low end. Natural gasoline (an NGL) tracks closest the high end and the price of crude oil, while ethane is at the bottom of list closest to the price of methane.
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Just yesterday MDN told you about one expert’s view that there won’t be one massive NGL storage hub built in the Marcellus/Utica, but a number of smaller hubs (see 
Last week MDN brought you details of the 
When the COVID-19 coronavirus hit, Shell stopped all work on its mighty cracker plant in Beaver County, PA, sending nearly 8,000 workers home in mid-March for what was thought to be “a few days to a few weeks” (see 
In April 2019 President Trump issued an Executive Order instructing the U.S. Dept. of Energy (DOE) to assess opportunities to promote growth in the Appalachian region. Yesterday a report was released by DOE doing just that. The 75-page report is titled “The Appalachian Energy and Petrochemical Renaissance: An Examination of Economic Progress and Opportunities” (full copy below). The report not only outlines petchem opportunities in the Marcellus/Utica, it makes recommendations to put those opportunities on steroids.
Two of the largest not-yet-completed pipeline projects in the Marcellus/Utica, Mountain Valley Pipeline (MVP) and Atlantic Coast Pipeline (ACP), are currently on hold with no construction activity due to various legal challenges by Big Green (see today’s story, Mountain Valley Pipe Update: Done and In-Service Early 2021). However, there are several other large and small M-U pipeline projects where construction continues, even with restrictions from the coronavirus pandemic. Which pipelines?
We spotted an article by ICIS (Independent Commodity Intelligence Services) about ethylene contracts in May increasing in price after a six-month-long decline. How does that potentially impact drillers in the Marcellus/Utica? We’ll tell you…
Marcellus/Utica propane flows from eastern Ohio and southwestern Pennsylvania all the way to southeastern PA via the Mariner East pipelines (ME1 and ME2). A petrochemical facility operated by Braskem America in Marcus Hook (near Philadelphia) processes some of that propane, turning it into polypropylene–the raw plastic used to make N95 masks, hospital gowns, and sanitary wipes–items in critical demand right now to protect health care workers against the COVID-19 coronavirus. This will bring tears to your eyes as it did ours: Some 40 workers at the Braskem plant voluntarily decided to stay at the plant for 28 days straight–working 12-hour shifts–not leaving once during that time so they could be sure of no COVID contamination while they worked to make polypropylene that in turn would be used to make personal protective equipment for healthcare workers. We salute them one and all!
Last week MDN highlighted an article from the Pittsburgh Post-Gazette about the low low prices Marcellus/Utica condensate has fetched since the beginning of the year (see 
Quick: What’s the raw material used to make respirator masks, gloves, face shields and other high-demand products used by the medical community to combat the coronavirus pandemic? Correct, it’s plastics. And what is the primary feedstock used to make the plastic that in turn makes all of those live-saving products? Correct again: natural gas and natural gas liquids. Or another word for it, petrochemicals. The “Think About Energy” seminar series, usually held in-person, hosted its first virtual event yesterday. Four fantastic speakers spoke about how the coronavirus pandemic, among other things, may drive the expansion of petrochemicals in PA. Expanding the petchem industry in the Keystone State may literally be a life or death issue.
Enverus, a leading oil and gas SaaS and data analytics company, has just released its latest FundamentalEdge report called, “
The Pittsburgh Post-Gazette is reporting Marcellus/Utica condensate, produced in places like southwestern Pennsylvania and eastern Ohio, briefly touched and went below $0/barrel last week, before recovering slightly. The article says the price M-U drillers are getting for condensate is down 91% from January of this year. What’s lacking in the Post-Gazette story is context for how important (or not) condensate is as a revenue stream for M-U drillers.
Everyone, and we mean everyone, is still reeling from the double shock of the COVID-19 coronavirus and its effect on the world economy, and the Saudis and Russians pumping more oil, driving oil prices into the ground. Frankly, the COVID-19 virus is the bigger deal. It will have long-lasting effects for years to come on the U.S. economy, including a big effect on the oil and gas industry. The question is, what kind of effect? Is there any way to predict what may happen in the coming couple of years and longer? No one can really predict, but if anyone could, it would be the bright minds at RBN Energy. They’ve attempted the near-impossible: Try to predict how things will change following the COVID-19 lockdown (around March 6). Try to divine how the oil and gas (and NGL and midstream) worlds will change in the coming months and years. Their assessment is sobering.
Mountaineer NGL Storage is planning to build an NGL (primarily ethane) storage operation in Monroe County, OH, located just across the river (and border) from West Virginia. Last summer David Hooker, president of Mountaineer and president of the parent company Energy Storage Ventures (located in Denver, Colo.) announced the project had received all necessary permits to begin construction, and that construction “could” begin by the end of March this year (see