The third-quarter price of the hypothetical NGL barrel averaged almost 50% higher than the same period last year, with movement in September resembling the tip of a chartable hockey stick that provided the increase.
It was the best month and quarter of the year for prices, and the best September and third quarter since 2014, when the oil and gas downcycle began.
And while weekly average prices for all NGL tumbled at both the Mont Belvieu, Texas, and Conway, Kan., hubs, a softening of natural gas prices allowed margins for six of the 10 NGL to expand.
Geopolitical tension surrounding the independence referendum in Kurdistan will likely support a West Texas Intermediate crude oil price above $50 per barrel (bbl), En*Vantage Inc. believes, with Turkey threatening to halt oil exports through its territory and Iraq demanding an international boycott. Kurdistan produces about 600,000 barrels per day (Mbbl/d) of crude, so the expected protracted political negotiation could influence markets for some time.
Hurricane Harvey put a dent in ethane prices in the quarter, snuffing a slow but steady rally with its assault on the Gulf Coast and the concentration of ethylene plants in the region. Still, ethane was up 9.1% in the third quarter over the second quarter at Mont Belvieu, and the September price dipped only slightly. Conway prices slumped more sharply.
Factors that have buoyed ethane prices, despite the storm’s damage, are both current and anticipated increases in demand. Dow Chemical’s LHC-9 ethylene plant in Freeport, Texas, began operations in September. That facility has an estimated capacity of 90 Mbbl/d, En*Vantage said.
The other demand source is exports.
En*Vantage estimates that Enterprise Product Partners LP’s Morgan’s Point terminal on the Houston Ship Channel shipped about 130 Mbbl/d in September, an increase of about 117% over August.
The dramatic price rise of propane, which drove the hypothetical barrel above $30/bbl at both hubs during the quarter, was reflected in a 48.6% increase at Mont Belvieu and a 49.4% jump at Conway. In the past year, propane was up 69.5% at Mont Belvieu and 72.6% at Conway.
The quarterly price of isobutane surpassed $1 per gallon (/gal) at both hubs for the first time since fourth-quarter 2016. A similar trend held for condensate: C5+ reached $1.20/gal for an average weekly price in September at Mont Belvieu for the first time since February. Prior to that, the price had not hit that level since June 2015.
Butane topped $/gal for the third quarter at Conway and came less than half a cent short at Mont Belvieu. The monthly price was over $1/gal at both hubs for the first time since February.
Joseph Markman can be reached at email@example.com or 713-260-5208.
2023-09-11 - The offering is managed by Grey Rock Energy Management LLC, and Granite Ridge will not receive any proceeds from the sale.
2023-11-09 - Sitio Royalties reported that it was selling its “lower-margin” assets in the Appalachia and Anadarko basins and also closed additional Permian Basin acquisitions.
2023-11-10 - As Civitas Resources concentrates on integrating three acquisitions from this year, an analyst said the Colorado E&P’s assimilations are going “swimmingly.”
2023-11-08 - Energy Transfer saw record NGL, oil and terminal volumes in the third quarter while integrating new assets and working on further expansions to its infrastructure.
2023-09-13 - SilverBow Resources is offering three million shares of its common stock to fund its pending acquisition of Chesapeake Energy Corp. ’s oil and gas assets in south Texas.