A little more than a year ago, my former colleague—des­perate for even a tinge of optimism—wrote about the glee fest spreading through the Oil Patch as the price of West Texas Intermediate (WTI) soared above $30 per barrel (bbl).
That’s right—back in the day (early 2016) happiness was defined by WTI clawing its way above $30.

Now that February 2017 has run its course, the industry finds hope more easily. After all, WTI has stayed solidly in the mid-$50/ bbl range for a while; the man who used to run ExxonMobil Corp. now runs the U.S. State Department; and two major pipeline proj­ects all but given up for dead are now good bets to resume con­struction, cheered on by the occupant of the Oval Office.

But that’s oil, and while oil prices influence natural gas prices, and natural gas prices affect NGL prices, the differentiation between oil and NGL becomes starker all the time. While oil and gas have been relatively stable so far in 2017, ethane plunged into a price abyss, only clawing its way back in weeks. The ethane price drop is the first way NGL prices will impact profits:

-En*Vantage Inc. points to a number of issues dragging down ethane. The analysts have noted in past weeks that petrochem­ical companies are holding onto their eth­ane in anticipation of higher prices later in the year. Recently, though, three crack­ers—Exxon Chemical in Baton Rouge, La.; Formosa No. 2 at Point Comfort, Texas; and Chevron Phillips Unit 33 at Sweeney, Texas—were scheduled for turnarounds at the same time, taking 180,000 bbl/d of eth­ane cracking demand off the market. Ethane rejection may have spiked to 700,000 bbl/d, En*Vantage speculated. But the analysts also suggest that producers buy now: “The fire sale on ethane may not last for long.”

-High export levels for propane are keeping prices high. At Mont Belvieu, Texas, the price cracked 80 cents per gallon (gal) for the first time since November 2014. The 27-month high was achieved at Conway, Kan., too, though 80 cents/gal was just barely missed. Inventories are tightening, but if the prices continue to rise then exports could suffer. En*Vantage noted that some European pet­rochemical companies have already switched to naphtha due to cost.

-Normal butane sold at a slight premium to isobutane at Mont Belvieu in January, though that trend reversed during the first week of February. At Conway, isobutane’s taking a wild ride, averaging almost $1.30/gal for the week after peaking on Jan. 26 at $1.47/gal.

Joseph Markman can be reached at jmarkman@hartenergy.com or 713-260-5208.

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