Frac Spread: NGL Prices Ride A Positive Wave

Gotta get the NGL to the water.

“The producers want the highest netbacks,” said Eric Friedrichs of EPIC Pipeline LP during this week’s DUG Permian Basin conference in Fort Worth, Texas. “We chose Corpus [Christi, Texas] specifically for that purpose.”

EPIC’s 700-mile NGL pipeline, with phase 3 expected to be in service in the second half of this year, will link the Permian Basin and Eagle Ford Shale to the Gulf Coast.

“Logistically, we’re just closer to Corpus from the Permian Basin so we’ve got a pretty low-cost structure there to get product onto the water,” said Friedrichs, the company’s CFO, during the conference’s takeaway roundtable discussion. “Corpus is significantly cheaper than Houston.”

And not just NGL. Everybody’s headed for the water, according to another roundtable participant.

“I think being in Texas and the Delaware, the market center for gas, the market center for NGLs and really, crude, everything’s trying to get to the Gulf Coast,” said Brian Best, executive vice president of business and commercial development for Vaquero Midstream. 

“With residue gas projects coming in, NGL projects coming in, we’re very well-positioned to create a seamless slow path all the way to the demand center,” he said.

Prices and margins were up across the board in the five-day tracking period that ended April 16. For all but Mont Belvieu, Texas, pentanes-plus, it ended a four-week slump that pulled ethane down 27% and the hypothetical NGL barrel down 7.4%.

Compared to prices a year ago, NGL still languish in lean times. Mont Belvieu ethane is off 19.4%; propane, 20.5%; butane, 16.8%; isobutane, 15.8%; and C₅₊, 19%.

In the week ended April 12, storage of natural gas in the Lower 48 experienced an increase of 92 billion cubic feet (Bcf), the EIA reported, compared to the Bloomberg consensus of an 85 Bcf increase. The figure resulted in a total of 1.247 trillion cubic feet (Tcf). That is 4.4% below the 1.304 Tcf figure at the same time in 2018 and 24.9% below the five-year average of 1.661 Tcf.

Technical issues with Hart Energy’s data provider do not allow us to provide the price of ethane from Conway, Kan., for the last week of March because of a loss of pricing data for that time period. For the same reason, we cannot compare the price of the hypothetical Conway NGL barrel to the previous week. Conway ethane prices are not available for March 2019 and first-quarter 2019. We apologize for the inconvenience.