Despite cold temperatures and heavy snow in parts of the country, natural gas liquid (NGL) prices largely fell at both
the Mont Belvieu, Texas, and Conway, Kansas, hubs the first week of March as the propane supply shortage from earlier this year caught up with demand.

However, the same could not be said of natural gas as prices rose by more than 50% from the end of February to just under $8 per million Btu. These prices will be short-lived as they are highly dependent on heating demand. In fact, April forward prices were trending lower as spring temperatures were expected. The start of the storage injection season will mean there won’t be a shortfall this year.

Although temperatures didn’t approach the lows experienced during the polar vortex events earlier this year, prices were at their strongest in early March. This caused frac spread margins to take downturns across the board.

The largest drop was for ethane. Prices fell because there is still a large amount of rejection taking place around the country. Much of this year has seen ethane prices strongly correlate with gas prices, but the sharp spike in gas prices resulted in the obliteration of this connection.

The outlook for propane is much stronger than ethane because it is possible that its price downturn was an overreaction by traders, and prices may improve in the spring as liquefied petroleum gas (LPG) exports improve. Stock levels are below their five-year average already.

Butane and isobutane prices fell at both hubs, but it appears that the bottom may have been hit—or is quickly approaching—as these decreases weren’t as pronounced as the two lighter NGLs, propane and ethane. Both butane
and isobutane decreased 4% at Mont Belvieu, falling to $1.26 per gallon and $1.34 per gallon, respectively. Midcontinent prices fell at a slightly smaller pace with butane down 2% to $1.22 per gallon and isobutane down 3% to $1.37 per gallon at Conway. Both sets of prices were by far the lowest this year.

Pentanes-plus (C5+) was the lone NGL to experience an uptick in value as prices kept pace with crude prices, which also rose the first week of March on tensions in Ukraine. On the back of this news, C5+ prices rose 1% to $2.15 per gallon at Mont Belvieu and 2% to $2.27 per gallon at Conway. This was the highest price in the Midcontinent since the
week of February 20, 2013, when it was $2.30 per gallon. The Mont Belvieu price was the highest since it was the same price the week of December 18, 2013—also related to a cold front.

Frank Nieto can be reached at fnieto@hartenergy.com or 703-891-4807.

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