SAN ANTONIO, Texas—As U.S. production rises, the customer base for a growing amount of natural gas is up in the air.

The picture is much clearer for the NGLs pulled out of natural gas—the extra product is headed for exports.

U.S. demand for ethane, butane, propane and other NGLs has been flat for a number of years, said Tyler Cott, vice president of NGLs for Enterprise Products Partners. Cott was on a panel of experts discussing the U.S. energy export market at the GPA Midstream Association Convention on Sept. 25. 

“From this point forward, it looks like all of the excess production has to export, for all those different commodities,” he said.  

Exports have seen dramatic growth over the past 15 years. About 164,000 bbl/d of NGL was sent overseas in 2010, according to the U.S. Energy Information Administration. Energy Transfer figured out how to export ethane and sent the first shipment in 2016.

In 2020, the U.S. shipped more than 1 MMbbl/d of NGL for the first time, and the number has increased by more 100,000 bbl/d since, with the vast majority of shipments coming from the Gulf Coast. The U.S. shipped 2.7 MMbbl/d in 2023 and is expected to set another record in 2024.

The U.S. now exports about 70% of its propane and about 19% of its ethane. The percentages will likely grow, said Kristen Holmquist, managing director of analytics for RBN Energy.

“It’s arguable that every incremental gallon, or barrel, or whatever unit you prefer of NGLs produced is going to have to be exported,” Holmquist said.

The amount of NGLs that will be exported is unclear. Several “cracker” projects to process NGLs from natural gas are ongoing, increasing U.S. export capacity. However, the amount of gas available is driven primarily by activity in the Permian Basin, where natural gas is a by-product of oil production.

Analysts have predicted large-scale growth in natural gas demand for the rest of the decade. Growth in LNG imports is expected to increase, with export capacity doubling by 2028, according to the EIA.

The final destination for natural gas molecules remains unclear, unlike NGLs. Overseas LNG markets are expected to grab available U.S. exports, but they may have to fight with domestic electric producers. U.S. power demand will double by 2030, according to Pickering Energy Partners’ estimate, and gas-fired generators are expected to be the primary source of new electricity.

Natural gas production, which ties into NGL production, may also be affected by government policy. The Biden administration initiated a pause on permitting new LNG facilities and has not given a clear timeline of when it will end. LNG companies have also faced recent court rulings that shot down permits granted by the Federal Energy Regulatory Commission.

Cott said he expected the industry to adjust to policy and keep fulfilling the market’s needs.

“Policy is important, don't get me wrong,” he said. “But we have proven now that we can navigate different scenarios and continue to get these products to the global market.”

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