Raymond James & Associates Inc. anticipates a flood of liquids production growth—the good kind, not the Hurricane Harvey kind—in the 2017-to-2019 time frame.

U.S. liquids output should increase by more than 3 million barrels per day (MMbbl/d), the analysts said in a research note, with 25% of that total represented by NGL. And it wouldn’t be possible, the analysts said, without NGL supply growth of 900 Mbbl/d.

“NGL production growth fits right alongside our bullish production/volume outlook for crude oil and natural gas—and is a key component of our bullish stance on the embattled midstream space,” said Raymond James.

That’s about as welcome as a burst of fresh spring-like weather to break up the pollen assault and slew of nor’easters.

Raymond James notes that its optimistic U.S. liquids growth estimate is about 20% above consensus and that the analysts are bullish about the price outlook as well.

“Increasing base decline rates will begin to eat away at annual crude oil production growth over the next five years,” they said. “Comparatively, NGL production growth rates could hold up a bit better thanks to increased ethane recovery.”

The three months that constituted fourth-quarter 2017 were “the three highest months of NGL production of all time!” the analysts noted, deploying an analytically atypical exclamation point. Production during that time was about 4 MMbbl/d, which was about 15% higher than the same period a year earlier.

Raymond James sees ethane as ready to claim the spotlight in 2018 and 2019 as demand centers pop up:

  • 180 Mbbl/d of cracking capacity added in 2017;
  • 210 Mbbl/d coming online this year;
  • 250 Mbbl/d of added capacity scheduled for 2019; and
  • A second wave of Gulf Coast capacity in development spoken about for the next decade, with about 375 Mbbl/d well along in development.

The forecast for 2018 is a 19% year-over-year growth in ethane recovery to 1.7 MMbbl/d. That will be followed by a 10% step up to 1.9 MMbbl/d in 2019 and a jump to 2.5 MMbbl/d in 2020, says Raymond James.

In the present, ethane is doing fine. The price cracked 25 cents per gallon (gal) for the first time in two months at Mont Belvieu, Texas, and the margin widened by 18% in the past to more than 8 cents/gal. At Conway, Kan., ethane approached 15 cents/gal for the first time in five weeks and the negative margin was cut in half in the past week.

The price of ethane was up 20.2% at Mont Belvieu over the price at the same time in 2017. At Conway, the price was down 14.1%.

As March ends, propane balances are tighter than the industry expected, En*Vantage Inc. said. Inventories could even slip below 30 MMbbl for the first time since the Polar Vortex winter of 2014.

At Mont Belvieu, the price of propane rose for the third straight week and was 40.4% above what it was last year at this time. En*Vantage expressed concern about market complacency.

“By being complacent about propane balances, our concern is that the market is becoming more vulnerable to upside surprises,” the analysts said. “We advise propane consumers to still take advantage of any seasonal weakness in propane prices in the back months.”

In the week ended March 23, storage of natural gas in the Lower 48 experienced a decrease of 63 billion cubic feet, the U.S. Energy Information Administration reported. The figure resulted in a total of 1.383 trillion cubic feet (Tcf). That is 32.7% below the 2.055 Tcf figure at the same time in 2017 and 20% below the five-year average of 1.729 Tcf.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.

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