NGL prices improved the week of Sept. 3 as several ethane crackers returned to service after undergoing unexpected turnarounds. Surprisingly, the biggest price turnarounds were at Conway while Mont Belvieu improvements were marginal—with ethane prices decreasing despite the increased cracking available.

Both Westlake Chemical Corp.’s Petro 1 Unit in Lake Charles, La., and Dow Chemical Co.’s LHC-8 plant in Freeport, Texas, restarted after undergoing unplanned maintenance during the past few weeks. Dow’s planned turnaround at the LHC-8 facility is likely to occur in late fall. According to reports, the planned turnaround at Chevron Phillips Chemical Co.’s Cedar Bayou cracker in Baytown, Texas, is also likely to be pushed back to 2015. In addition, Fomosa Plastics Corp. has delayed the planned five-week turnaround at its Point Comfort, Texas, Olefins 1 cracker as a result of steady ethylene spot prices caused by tightening supplies. The turnaround was originally planned for the beginning of September, but has been moved to the end of October.

While these schedule changes will increase ethane cracking capacity, ExxonMobil Corp.’s Baytown, Texas, Olefins Plant #2 was taken offline for a planned 44-day turnaround while Chevron Phillips Chemical’s Port Arthur, Texas, and Williams Cos.’ Geismar, La., plants remain offline while expansions are being completed. Both facilities are expected to return to service by the end of October.

Given these turnarounds, ethane prices are likely to remain challenged at least through the rest of the year as supplies are very high. This has caused prices to remain under 30 cents per gallon (/gal) for the past few months. This week the Mont Belvieu price dipped 2% to 23 cents/gal while the Conway price rebalanced with a 7% increase to 22 cents/gal.

Propane prices are nearly identical at both hubs as both improved 3% to $1.05/gal. This was the highest price at Mont Belvieu since early July and the highest price at Conway in a month as export demand is increasing in preparation of Sunoco Logistics Partners LP’s Mariner South project in Nederland, Texas, which is scheduled to begin operations at the start of next year. In addition, the U.S. Energy Information Administration (EIA) reported that propane storage levels increased at a slower rate than most analysts anticipated with a 73 million barrel (bbl) build the week of Sept. 5. This still left propane stocks at their highest levels in the past 10 years, but demand is also expected to be at its greatest level in that same period this fall with multiple markets. This should help support prices going forward, though the huge spikes from last winter would require another weather driven surge in demand.

West Texas Intermediate (WTI) crude prices fell below $93/bbl as the market is well supplied. However, En*Vantage stated that there are reasons for optimism for prices going forward—namely, the record refinery runs that have been taking place this summer and that crude inventories are at five-year lows.

“We feel the weakness in crude prices has to run its course, but the backend of the forward curve for WTI looks attractive. The softening in crude prices today will give rise to slow production growth for international crudes in the near future. Consequently, further weakness in crude prices sets up a strong rebound in crude prices possibly next year as the likelihood increases for global demand growth to exceed global supply growth,” the company said in its Sept. 11 Weekly Energy Report.

Despite the decrease in crude prices, heavy NGL prices were up at both hubs as refiners are switching to winter-grade gasoline and there is an increase in butane exports. Butane improved 3% at Mont Belvieu to $1.25/gal, its highest price since it was $1.28/gal the first week of July. The $1.25/gal price at Conway represented a 2% improvement from the previous week and the highest price at the hub since mid-July.

Frac spread margins were also supported by a downturn in gas prices, which saw the Conway price fall 1% to $3.75 per million Btu (/MMBtu) and the Mont Belvieu price drop 2% to $3.86/MMBtu. The theoretical NGL bbl price rose 2% at Conway to $40.54/bbl with a 4% improvement in margin to $26.84/bbl. The Mont Belvieu price rose 1% to $40.42/bbl with a 3% gain in margin to $26.32/bbl.

The most profitable NGL to make at both hubs remained C5+ at $1.67/gal at Conway and $1.70/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.02/gal at Conway and 90 cents/gal at Mont Belvieu; butane at 86 cents/gal at Conway and 85 cents/gal at Mont Belvieu; propane at 71 cents/gal at Conway and 70 cents/gal at Mont Belvieu; and ethane at negative 3 cents/gal at both hubs.

Natural gas storage levels had a fairly robust injection the week of Sept. 5, the most recent data available from the EIA. Domestic storage levels rose 92 billion cubic feet to 2.801 trillion cubic feet (Tcf) from 2.709 Tcf the previous week. This was 14% below the 3.244 Tcf figure posted last year at the same time and 14% below the five-year average of 3.264 Tcf.

While cooling demand levels off as summer draws to a close, there could be some instances of heating demand in the Northeast and Midwest, where cooler-than-normal temperatures are expected according to the National Weather Service’s forecast. The outlook also anticipates warmer-than-normal temperatures along the West Coast and Rockies.

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