Frac Spread: NGL Climbs To Another High For The Year

Ethane broke through 25 cents per gallon (gal) at the Mont Belvieu, Texas, hub for the first time since July 2014, driving the hypothetical NGL barrel to another weekly high for the year.

At Conway, Kan., ethane neared 23 cents/gal to reach its highest level since September 2014. The Conway barrel cracked $24/bbl for the first time since December 2014.

NGL prices float between West Texas Intermediate (WTI) crude oil and the price of natural gas. The Hart Energy Frac Spread chart uses the Houston Ship Channel hub price for Mont Belvieu and Chicago Citygate for Conway.

Both experienced auspicious weeks. The Houston high price for the year, $3.44 per million British thermal units (MMBtu) set on Oct. 18, was its highest since $3.59/MMBtu set exactly 22 months earlier on Dec. 18, 2014. Last week’s high Chicago price of $3.21/MMBtu, set on the same day, was that hub’s highest since March 5, 2015.

The Chicago range was matched by the U.S. benchmark price at Henry Hub in Louisiana, which was $3.22/MMBtu on Oct. 18, its highest since March 5, 2015.

Ethane enjoyed a solid week in terms of profitability as its margins widened at both hubs. The barrel’s margin also grew at Conway, as did all NGL components, but narrowed slightly at Mont Belvieu.

Propane at Mont Belvieu again set a high mark for the year, with its price the best since March 2015. That price of 58.16 cents/gal is 86% above the low point for 2016, set in late January.

Conway’s propane price breached 55 cents/gal for the first time since first-quarter 2015 and was 93% more than its low point for the year, set in mid-January.

Butane was up 5% at Mont Belvieu to its highest point since December 2014, when the Frac Spread feature headline was a prescient “Tough Outlook For Hydrocarbon Markets.” At Conway, the price rose a shade more than 2 cents to just under 75 cents/gal to its highest level since January 2015.

Mont Belvieu isobutane was up a sharp 7% to just under 92 cents/gal and has soared 50% in the past six weeks. At Conway, isobutane tacked on another 3% in the past week and is 79% higher than its low for the year, set in January.

Though losing 2% in the past week, the Mont Belvieu price for C₅₊ was still the second-highest for 2016. The same was true at Conway, though the slip in price for the week was only 1%.

Storage of natural gas in the Lower 48 rose by 77 billion cubic feet (Bcf) in the week ended Oct. 14, the U.S. Energy Information Administration reported. The increase, above the Bloomberg consensus average of 73 Bcf, results in a total of 3.836 Tcf. That’s a 1.2% increase over the 3.79 Tcf total at this time in 2015 and 5.1% above the five-year average of 3.651 Tcf.

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