A downturn in crude oil prices the week of February 13, which caused the price to drop below $95 per barrel (/bbl.),, saw heavy natural gas liquids (NGL) prices to fall in the latter stages of the week. However, prices were generally up on a weekly basis at both hubs.

Propane had the largest price increases at 2% at both Mont Belvieu and Conway as a result of increased heating demand that has diminished storage overhangs. The Mont Belvieu price rose to 87¢ per gallon (/gal) and the Conway price rose to 82¢/gal; both were the highest prices at their respective hubs in 2013.

According to En*Vantage, improvements in propane prices should continue for the next several weeks as the storage overhangs continue to be worked off. The lone aspect that could hinder these improvements would be a major decrease in crude prices.

Mont Belvieu C5+ also experienced a 2% price improvement as the price rose to $2.41/gal, its highest price since it was $2.43/gal the week of March 21. The Conway price rose 1% to $2.36/gal, its highest price since it was $2.39/gal the week of March 27.

“Natural gasoline’s (C5+) relationship to West Texas Intermediate strengthened this week. We suspect that with U.S. refinery runs down due to turnarounds less normal and isobutane is being demanded for gasoline blendstocks. However, export demand for natural gasoline remains strong as more Gulf Coast natural gasoline is going up the Explorer and Capline systems to be exported to Canada as diluent,” En*Vantage said in its February 21 Weekly Energy Report.

Butane and isobutane prices were a mixed bag this week as butane prices were up at both hubs and isobutane prices were down at both hubs. Mont Belvieu butane was up slightly to $1.65/gal while Conway butane rose 1% to $1.58/gal. Both prices were amongst the lowest at both hubs since the fall of 2012. Mont Belvieu isobutane fell 4% to $1.68/gal, its lowest price since it was $1.67/gal the week of August 15. The Conway price was down slightly to $1.67/gal, its lowest price since it was $1.63/gal the week of January 9.

Ethane margins remain positive at both hubs, but very thin after a 2% downturn at Conway and a flat price at Mont Belvieu. The Conway price fell to 23¢/gal, its lowest price in a month. The Mont Belvieu price was flat at 25¢/gal. The Mont Belvieu margin rose 19% as a result of the combination of the improvement in the ethane price and the 2% drop in natural gas price to $3.20 per million Btu (/MMBtu). However, the Conway margin dropped 26% due to the 1% increase in natural gas prices to $3.25/MMBtu at the hub along with the flat price of ethane.

The theoretical NGL bbl. price increased 1% at both hubs this week as it increased to $42.37/bbl. at Conway with a 1% increase in margin to $30.50/bbl. The Mont Belvieu bbl. price rose to $43.64/bbl. with a 2% increase to $31.95/bbl.

The most valuable NGL to make at both hubs remained C5+ at $2.00/gal at Conway and $2.06/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.35/gal at Conway and $1.36/gal at Mont Belvieu; butane at $1.25/gal at Conway and $1.31/gal at Mont Belvieu; propane at 52¢/gal at Conway and 57¢/gal at Mont Belvieu and ethane at 2¢/gal at Conway and 4¢/gal at Mont Belvieu.

The extended cold front that has hit much of the U.S. the past month saw increased draws on natural gas in storage levels. According to the Energy Information Administration’s storage report for the week of February 15, natural gas in storage decreased 127 billion cubic feet to 2.4 trillion cubic feet (Tcf) from 2.527 Tcf. This was 9% below the 2.642 Tcf figure reported last year at the same time and 18% above the five-year average of 2.039 Tcf.

Heating demand in the Mid-Atlantic, Southeast, Midwest and Gulf Coast should remain high according to the National Weather Service’s forecast for this week, which anticipates colder-than-normal temperatures. The New England, West Coast and parts of the Upper Midwest are expected to experience decreased heating demand based on the forecast calling for warmer-than-normal winter temperatures.

Data Provided by Intercontinental Exchange. Individual product prices in
cents per gallon. NGL barrel in $/42 gallons | Source: Frank Nieto

Price, Shrink of 42-gal NGL barrel based on following: Ethane, 36.5%; Propane, 31.8%; Normal Butane, 11.2%; Isobutane, 6.2%; Pentane+, 14.3%, Fuel, frac, transport costs not included. Conway gas based on NGPL Midcontinent zone, Mont Belvieu based on Houston Ship Channel. Shrink is defined as Btus that are removed from natural gas through the gathering and processing operation. Source: Frank Nieto

Contact the author, Frank Nieto, at fnieto@hartenergy.com

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