Mont Belvieu Ethane Improves By 15%

Mont Belvieu NGL prices improved across the board the week of Oct. 12, while Conway prices largely suffered. The one NGL that was up at Conway was C₅₊, which benefitted from improved crude prices.

The price of Conway C₅₊ rose 7% to $2.00 per gallon (/gal), its highest price since it was $2.04/gal the week of Sept. 14. The price increase saw C₅₊ regain its status as the most profitable NGL at the hub for the first time in six weeks. The Mont Belvieu price also improved this week as it was up 4% to $2.32/gal, its highest price in a month.

While C₅₊ prices were improved at both hubs, the NGL with the largest increase at either location was Mont Belvieu ethane. The price rose 15% to 90¢/gal, its highest price since it was 95¢/gal the week of Sept. 3, 2008.

“We are now seeing a pattern developing for ethane, where prices will surge, pull back and surge again. Ethane is the only attractive feedstock to crack and its liquidity can be lacking at times, so when major buyers come into the market it can have a dramatic impact on ethane prices, especially when ethane balances are tight as they are now. Basically, ethane will remain tight unless the ethylene industry reduces operating rates,” according to En*Vantage’s Weekly Energy Report.

En*Vantage also reported that two ethylene plants – Formosa’s Point Comfort #2 cracker and Williams’ Geismar plant – were restarted this week. Point Comfort #2 had been offline since Sept. 1 for scheduled maintenance while Geismar was offline with an unscheduled outage on Oct. 6. ExxonMobil’s Baton Rouge, La. cracker still has yet to return to service and is believed to have had its turnaround time extended to 60 days and is expected to increase capacity by 10,000 barrels per day. In addition, Shell’s Deer Park cracker went down Oct. 9 for a planned 45-day maintenance.

Conway ethane continues to fall, as it was down fourth straight week as the market lags far behind Mont Belvieu. The Conway price dropped 4% to 38¢/gal, its lowest price ins six weeks.

As we reported last week, propane demand appears to be decreasing and inventory is expected to begin to grow next month compared to the same time last year, which would be a first for 2011. The primary reasons for the reduced demand is because the weather hasn’t been cold enough to create heating demand and the global economic slowdown has caused an increase in propane on the international market. The Conway price decreased 1% to $1.38/gal, the lowest price at the hub since it was the same price the week of April 20. Despite this decrease in demand, Mont Belvieu propane improved 3% to $1.50/gal, its second lowest price in 15 weeks.

Butane and isobutane both moved in the same direction at both hubs as the Mont Belvieu prices improved 2% while the Conway prices were largely unchanged from last week. As with C₅₊, these price movements were largely attributed to improved crude prices. Mont Belvieu butane improved to $1.81/gal while Conway butane was down slightly to $1.53/gal. Isobutane improved to $2.08/gal at Mont Belvieu while Conway isobutane was down slightly to $1.91/gal.