Frac spread margins were a mixed bag in October. Energy commodity prices have grown stagnant as European economies took a downturn, which caused demand for propane exports to level off. In addition, a weaker performance by the U.S. economy also hurt worldwide markets.

The biggest exception to this rule was the performance of crude oil, which resulted in improved C5+ prices at both Conway and Mont Belvieu. The margin at Conway improved 6% based on a $0.22 per gallon improvement in the price at the start of October to the end of the month. The Mont Belvieu price rose $0.10 per gallon in the same time frame, which helped the margin improve 6%.

Nothing symbolized the mixed result for frac spreads in the month of October more than ethane, which had both the largest increase in margin for the month and the largest decrease for the month.

The Conway margin had the largest drop at 27% from September while Mont Belvieu's 10% improvement in margin was the biggest in the month. The market for ethane in North America remains strong as ethylene producers continue to operate at record rates and ethane is by far the most preferred feedstock.

As a result, the Mont Belvieu margin is much stronger because of its close proximity to the North American petrochemical market. The Conway hub's location in the Midcontinent places it at a disadvantage as there is no such market in that part of the country and capacity out of the Midcontinent is tight. Additionally, capacity was further tightened as a result of outages on two natural gas liquids pipelines owned by Enterprise Products Partners LP in September that resulted in a great deal of stranded gas in the region.

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