June frac spread

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: Hart Energy

Conway ethane margins dropped nearly 100% in April due to the delay of Kinder Morgan Inc.'s pipeline that was meant to transport an ethane-propane mix to Nova Petrochemical's plant in Sarnia, Canada. Kinder Morgan expected to begin transporting 13,000 barrels per day on April 1, but delays in securing regulatory approvals delayed the start-up. The spread for Conway ethane dropped 96% in April and left the product only marginally profitable.

Mont Belvieu ethane's margin improved 4% in April. The near-term fundamentals for Mont Belvieu ethane were slightly negative because of the scheduled maintenance at ethane-cracker demand centers in the Gulf Coast. The turnarounds will be completed in May and June, but several other fractionators in the Gulf Coast are scheduled for maintenance soon. By October, forecasters anticipate Mont Belvieu ethane prices to increase to $0.60 per gallon.

Heavy NGL prices and margins were stronger than light NGLs due to their relationship with crude oil, but all saw decreased margins in April, driven by improved gas prices. Natural gas prices rose 12% to $2.02 per million Btu at Conway, and 17% to $2.06 per million Btu at Mont Belvieu, due to a new storage report.

While gas prices improved, the theoretical NGL barrel price dropped at both hubs. The Conway price was down 7% to $40.89 per barrel with an 11% drop in margin to $33.49 per barrel. The Mont Belvieu price dropped 1% to $52.80 per barrel with a 3% drop in margin to $45.26 per barrel.